The rent is too damn high in D.C., and Attorney General Brian Schwalb claims in a new lawsuit that a tech company illegally colluded with 14 of the city’s largest landlords to keep it that way.

Schwalb announced Wednesday that he’s filing a federal lawsuit against RealPage, a Texas-based company that works with big commercial property owners to help them set rent prices, for a series of antitrust violations. He alleges that the firm and 14 of its clients exchanged confidential pricing information to jack up rents for more than 50,000 apartments across the District, forcing tenants to pay millions more than they would’ve in a traditional real estate market.

The use of the company’s software, which recommends rent prices for apartments by using an algorithm to calculate what the market will bear, has become so widespread in the D.C. area that Schwalb argues it has ripple effects for tenants beyond just those renting apartments from RealPage’s clients. His attorneys charge that this is “potentially impacting all market participants” and “illustrates the significant, widespread effects of collusive adoption of RealPage’s algorithmic pricing models,” according to a release shared with Loose Lips ahead of the lawsuit’s filing.

“RealPage and the defendant landlords colluded to forgo traditional market competition in favor of a centralized, price-fixing scheme that artificially raises rents for District tenants, causing residents to pay millions of dollars above fair market prices,” Schwalb says in a statement. “They communicated openly about their anticompetitive scheme at public events and through advertising campaigns, and actively worked to recruit new members into what amounted to a District-wide housing cartel.”

Schwalb has hinted at legal action like this since asking the D.C. Council to approve a contract with a private firm, Cohen Milstein Sellers & Toll PLLC, a few weeks ago, but this is the first official confirmation that he’s targeting RealPage. It also represents the first public disclosure of the landlords he believes illegally shared rent pricing data alongside the company, and the list includes many of the largest (and most politically influential) firms doing business in the city. The suit targets:

“In seeking to draw a causal connection between revenue management software like ours and increases in market-wide rents, this copycat suit repeats the inaccuracies of predecessor cases,” RealPage spokeswoman Jennifer Bowcock wrote in an email to LL. “The complaint and others like it are wrong on both the facts and the law and we will vigorously defend against it.”

The company (and many of its clients) are currently facing more than a dozen lawsuits from renters across the nation making similar antitrust claims, but the District appears to be the first local government to take legal action. The Department of Justice has also begun an antitrust investigation of the company.

Much of this attention sprung from a ProPublica investigation of RealPage last year, which found evidence that the company’s executives and their clients have spoken openly about how this software has empowered them to raise rents higher than they would have otherwise. 

RealPage’s algorithm is based, in part, on data shared from landlords that are, theoretically, competing with others in the market, giving rise to these antitrust concerns. And Schwalb says he found evidence that “participating landlords actively worked to recruit additional landlords into the illegal scheme, providing written and oral testimonials touting the benefits of using RealPage’s technology to inflate rent prices and increase revenues,” according to the release. He claims that the landlords work diligently alongside RealPage to ensure their workers rely on the software’s recommended rent prices, making it deliberately difficult for them to choose different rents than what the company software suggests.

“In a truly competitive market, one would expect competitors to keep their pricing strategies confidential—especially if they believe those strategies provide a competitive edge,” Schwalb’s attorneys wrote in a copy of the suit forwarded to LL ahead of its filing. “Here, in contrast, defendants understand that recruiting more would-be competitors to their anticompetitive scheme only increases their mutual ability to extract unlawfully higher rent, confident that their competitors will not dramatically undercut their prices.”

The prosecutors claim in the suit that RealPage has essentially become the “‘Big Tech’ company of rental housing,” and, much like the country’s other tech giants, it’s swallowed up competitors to achieve market dominance. The company bought several other software firms with similar products over the past two decades, Schwalb’s attorneys note, including its biggest competitor in 2017.

Combined with its “unrivaled access to proprietary data,” this has helped RealPage achieve a “dominant market position,” Schwalb argues. He believes something like 30 percent of D.C. apartments in buildings with five or more units and 60 percent of apartments in buildings with 50 or more units are controlled by RealPage clients. The latter figure shoots up to 90 percent when evaluating the D.C. region, more broadly.

“As a practical matter, this leaves many District residents with no choice but to pay RealPage’s inflated rents,” Schwalb’s lawyers wrote. 

All of this forms the basis of an antitrust case against both the company itself and its clients, Schwalb argues, because he can show evidence of their market power and work to retain that dominance. He claims current and former employees at these landlords have shared evidence of competitors meeting with each other to discuss the sharing of non-public data, and they regularly discuss the use of the software in online forums and industry conferences. 

The AG is asking for a federal judge to bar this sort of behavior moving forward, and for the appointment of a corporate monitor to ensure this won’t continue. He also wants unspecified monetary damages for this behavior (though some of that will be shared with the Cohen Milstein attorneys, who helped file this case).

A judge has yet to schedule any additional proceedings for the matter.

This story has been updated with a comment from RealPage.