Is that "price collusion" though? How's that different than if you're selling stuff on cragislist/facebook marketplace/ebay, and you set your price by looking what other listings are?
When I'm selling something used, and I look at prices for other listings, I'm competing with them. I want to have a price that is attractive, given the landscape. I'm not messaging all the other sellers and suggesting we all raise prices by 10%, or having an algorithm run by a third party service do that indirectly.
RealPage made it so that landlords were less competitive and more cooperative. Landlords would share proprietary information and then RealPage would help them all set prices collectively. It's just old fashioned price fixing with a SaaS and an algorithm.
So the difference is using pricing info to beat your competitors vs using pricing info to collude with your competitors.
>I'm not messaging all the other sellers and suggesting we all raise prices by 10%,
The way competitors legally message each other to suggest a price increase is via the prices themselves.
E.g. an airline wants to raise the price of a ticket from New York to Los Angeles from $500 to $530 -- and they secretly want the other airlines to follow them and raise their prices too.
1) The airline submits the price increase to the global travel reservation system that all airlines can see. All the other airlines have computers constantly monitoring all the other airlines' ticket prices and can instantly adjust prices in response.
2) The airline that wants the price increase waits to see how the other airlines respond. Either (1) the competitor airlines keeps their lower prices to "take market share" -- or -- (2) they also raise their prices to match which "maintains status quo of market share" but all competitors get to take advantage of charging the higher price
3) If the other airlines don't match the higher price, the airline that "proposed" the higher price then rolls it back to $500. All this can happen within a few hours.
That's the way competitors "collude" to raise prices out in the open. The publicly visible prices are the messaging system. The loophole here is that the changing prices must be visible because the potential passengers buying the tickets need to see them too.
The above scenario has been studied by various papers and the government. The prices simultaneously act as both a "cost to buy" and as a "message to cooperate".
Legal "collusion" via price signals is easier in concentrated industries with few competitors (e.g. airlines). It's harder for fragmented markets or markets with hundreds-to-thousands of competitors. E.g. a barbershop wanting to raise the price of haircuts by $5 isn't going to get the hundred other barbershops to also raise their prices by $5.
>The above scenario has been studied by various papers and the government. The prices simultaneously act as both a "cost to buy" and as a "message to cooperate".
Yea I mean. A simple watch of movie film "A bueaitful Mind" starring John Nash as math genius russel crowe. Crowe equilibrium or whatever it's called. That scene where the nerds were in the bar trying to get the girl. his friends said let the best man win and crowe said - no - only way to win is we collude. and then they won. Now imagine that -- but it's not russel crowe, it's united airlines.
I mean if you look at companies from that crowe equilibruim perspective and treat them as sophisticated and rational.. one would expect most everything to be rigged!
If landlords want to just look at other public listings and adjust their own prices in response (which is completely legal to do) then why does a service like Realpage exist?
It’s a complete suite for property management companies that enables an org to manage and report on vast portfolios of thousands of units. Provides functions to local property managers such as contracts and evictions, rent collection, and purchase order management for vendors. Regionally it provides metrics and pricing controls. Other competitors like Yardi exist and provide similar toolkits, but RP is gigantic enough to get the bulk of attention.
Wait, your #3 appears to combine multiple factors. Is it "sharing nonpublic data" that's the problem or is it "setting prices collectively" that's a problem? Those aren't the same thing. Price-setting implies a commitment not to outbid counterparties.
> RealPage’s revenue management software has relied on nonpublic, competitively sensitive information shared by landlords to set rental prices. RealPage’s software has also included features designed to limit rental price decreases and otherwise align pricing among competitors.
The sentence you quote says Realpage used nonpublic information to facilitate the setting of prices, but does not say that the sharing of nonpublic information is itself price setting. You can do lots of things to set prices; the key feature again is a commitment against defection.
I'm not sticking up for Realpage; I don't know enough about how it works.
The software literally includes an algorithm that says "this week, you will set the rate for this apartment at $X" based on RP's data.
And, if you want to deviate from that, without being kicked off RP and losing your substantial fee payments, you will do follow that rate (and they tell you that they _will_ check), or you can "request an override" from RealPage, that they may allow or deny at their discretion (and RP agents are formally trained that override approvals may not exceed 5% of requests).
> Consistent with their agreement to impose rents generated by RealPage RM Software nearly all the time, Defendants agreed to limit overrides. For example, a RealPage LRO training document states: “Overrides should be few and far between.” Similarly, internal RealPage LRO training documents teach cartel members’ regional managers to beware of “Override Overload” or “rogue” leasing agents who too frequently override the LRO-generated pricing.
> An internal presentation created by Defendant Greystar explicitly
acknowledges that RealPage RM Software users should each seek to accept at
least 95% of the RealPage-generated prices, emphasizing that “Discipline [o]f
using revenue management increases more consistent outcomes.”
> Former Greystar employees have similarly confirmed that negotiating rents other than those set by the RealPage RM Software was unacceptable.
> Even where Participating Landlords do not enable auto-accept, most landlords cannot, on their own, charge rents other than those generated by RealPage’s RM Software— landlords can only “propose an override.” The landlord must then provide a written business justification for why they wish to depart from the RealPage-generated rent.
See, all this sounds pretty compelling! I was just stuck on the "confidential information sharing" part of it; that alone, I don't think? could be the basis of an antitrust claim?
The difference is that’s an open market. When rents change off market, going up at the end of the year for example, that information isn’t available to market participants.
>The difference is that’s an open market. When rents change off market, going up at the end of the year for example, that information isn’t available to market participants.
1. How is this any different than other sorts of transactions that occur on a recurring basis? For instance dog walking services or personal trainers? Such vendors are also presumably pricing their services based on what everyone else's pricing is, but any subsequent price changes aren't public.
2. Under current competition law, whether something is an "open market" is irrelevant to whether a given pricing strategy is illegal or not. Collusion doesn't magically become legal because it's done on the open market.
You don't go to those other people and tell them what they should set their price as. RealPage does, that's the business model. If enough real estate operators use RealPage, RealPage could arbitrary suggest a 100x price hike and it would be competitive.
