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Pricing Conduct Committee: Price Tags Nov. 2023

Aidan Chen, Rachel Lumen, and Rahul A Darwar

Pricing Conduct Committee: Price Tags Nov. 2023
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DOJ Considering Statement in RealPage Rental Software MDL

On October 12, 2023, the Department of Justice (DOJ) filed a Notice of Potential Participation indicating that it may file a Statement of Interest in a multidistrict litigation (MDL) against RealPage, a provider of property management software, and landlords across the country (Dkt. 599). In a Second Amended Consolidated Class Action Complaint, the class of multifamily tenants allege that the defendants used RealPage’s revenue management software (RMS) to fix rents in the housing market (Dkt. 530). The RMS purportedly relies on “non-public, competitively sensitive data” of its users—“including their lease transactions, rent prices, and occupancy and inventory levels”—to train an algorithm that sets rents to optimize for revenue.

According to the Second Amended Complaint, use of the RMS is contingent on property management companies submitting such information to RealPage's data pool and accepting the algorithm-determined pricing scale. Such policies, according to plaintiffs, improve the algorithm and strengthen adherence to the coordinated pricing scheme. To this end, RealPage further “established a rigorous monitoring and compliance system” to ensure adherence. Any deviations from the recommended price allegedly require RealPage approval, and prices are constantly monitored by RealPage “Pricing Advisors.”

The DOJ’s Notice states that it is particularly interested in addressing the proper application of Section 1 of the Sherman Act in the context of algorithmic pricing because it “has become more prevalent in the modern economy” and is therefore “of increasing significance to the application of antitrust law across the economy.”

The case is In Re: Realpage, Inc., Rental Software Antitrust Litigation (No. II), 3:23-md-03071 (M.D. Tenn.).

DOJ Delays Proposed Settlement in Real Estate Broker Fee Antitrust Class Action

On September 28, 2023, the DOJ submitted a statement of interest, seeking to delay and potentially challenge the proposed settlement between a private class and defendant MLS Property Information Network, Inc. (MLS PIN), New England’s largest Multiple Listing Service (MLS PIN). The Plaintiff class and MLS PIN had reached a proposed settlement of $3 million, with $900,000 earmarked for attorney’s fees, $200,000 in expenses, and $250,000 going toward notifying the class. DOJ expressed concerns that the proposed settlement may curtail buyer-broker competition by removing control over fees from buyers and giving that control to seller-brokers, leading to “inflated real estate commissions” and harming “both home sellers and homebuyers” (Dkt. 230). It that commission rules are the subject of multiple pending suits and prior agency investigations.

The next day the plaintiff class filed an opposition, noting that DOJ had access to the settlement agreement for more than three months and has another two months to file an objection before the deadline on December 7, 2023 (Dkt. 231). The plaintiff class noted that the proposed settlement would provide notice to sellers and remove the prohibition on sellers negotiating the commission amount.

On October 3, 2023, Judge Patti Saris granted a stipulated agreement for extension, giving DOJ until February 5, 2024 to submit an objection (Dkt. 233).

The case is Nosalek v. MLS Property Information Network, Inc. et al, 1:20-cv-12244-PBS (D. Mass.).

Federal and State Action on Junk Fees

On October 11, 2023, President Biden announced a broad, government-wide initiative to address the increasing proliferation of “junk fees” across all sectors of the economy. Junk fees, which are additional, hidden, unavoidable, surprise, or unnecessary fees added to goods or services that misrepresent the total cost of the purchase, are estimated by the FTC to cost consumers tens of billions of dollars per year in unexpected costs.

On the same day, the FTC announced a new proposed “Rule on Unfair or Deceptive Fees” to prohibit misrepresentation of the total cost of goods and services by omitting mandatory fees from advertised prices. The FTC’s promulgation of the draft rule follows an earlier November 2022 Advanced Notice of Proposed Rulemaking on the same topic that generated 12,000 public comments, the majority in support of agency action to address the issue.

The FTC is not the only federal agency taking action against junk fees. The CFPB has its own ongoing initiative to target junk fees charged by banks and financial institutions. This has most recently taken the form of CFPB guidance to prohibit large banks from charging customers junk fees to access basic information about their accounts. Other agencies, including the Department of Transportation, Department of Labor, and Federal Communications Commission have also taken action to target junk fees in particular sectors of the economy, including for airline ticketsretirement accounts, and broadband services.

In addition to the federal agency action, states are also seeking to address the proliferation of junk fees across the economy. In California, Governor Newsom recently signed SB 478 into law, which takes aim at advertised prices that are less than what a consumer will actually have to pay for a product once other fees or charges, except taxes and shipping, are added. Effective July 1, 2024, SB 478 applies to both consummated and contemplated transactions, and an actual purchase is not required to run afoul of the new law.