RealPage Settlement Shows Algorithmic Pricing Isn’t the Enemy

The Department of Justice’s settlement with RealPage, a property management company that offers algorithmic pricing software to help landlords price their units, reinforces a principle that courts have repeated for decades: Section 1 of the Sherman Act regulates agreements, not the analytical tools that firms use independently to set prices.

Pricing software has become the backbone of operational decision-making in sectors as varied as:

• Airlines, which have depended on yield-management algorithms since the 1980s to determine fares thousands of times a day.
• E-commerce platforms, which use real-time data to update prices across millions of Stop-Keeping Units.
• Ride-share and delivery networks, where dynamic pricing helps match riders with drivers.
• Energy markets, where wholesale operators integrate predictive analytics to balance load and price fluctuations.
• Hotels, car rentals, and logistics, where revenue-optimization engines determine inventory levels and day-ahead prices.

None of these systems were designed to facilitate agreements among competitors, and typically they don’t do so. They are modern equivalents of what firms have always done: gather data, analyze it, and set prices unilaterally.

The RealPage settlement doesn’t disturb this baseline reality. DOJ didn’t claim that using pricing algorithms is inherently unlawful, and it didn’t attempt to classify algorithms as a per se violation. In fact, the settlement allows the algorithmic software to remain fully operational. DOJ merely worked with the company in question on a straightforward settlement agreement — which included assurances of independent oversight to ensure RealPage remains legally complaint — to get this flawed August 2024 algorithmic pricing case finally resolved.

The clearest judicial guidance came from the US Court of Appeals for the Ninth Circuit in Gibson v. Cendyn, a case involving several Las Vegas hotels’ use of a shared revenue-management vendor. Plaintiffs advanced the theory now familiar in algorithmic-pricing cases: If competitors use the same software, and the software produces similar pricing recommendations, that must imply an agreement.

The Ninth Circuit rejected that inference outright. The court held that:

• Parallel adoption of the same vendor’s software doesn’t establish a conspiracy.
• Independent pricing decisions, even when informed by similar analytics, aren’t unlawful.
• A Section 1 claim requires allegations tending to show that competitors agreed to follow the software’s recommendations or coordinated through the vendor.

The opinion made it explicitly clear that, absent evidence of an agreement, the use of revenue-management tools is lawful and not collusive. Profit-maximizing behavior, even when aided by sophisticated software, isn’t probative of a contract.

Far from creating new doctrine, the RealPage settlement and Gibson fit neatly within decades of antitrust law. Courts have consistently required evidence of a “contract, combination, or conspiracy,” and they have repeatedly rejected efforts to infer agreements from parallel conduct alone. Examples include:

• Matsushita: Antitrust plaintiffs must present evidence tending to exclude independent action.
• Twombly: Allegations of parallel conduct don’t state a claim without “plus factors” indicating agreement.
• Theatre Enterprises and Monsanto: Conscious parallelism, even when rational and widespread, isn’t enough.

This body of law predates algorithms by decades, yet its logic that software that processes information doesn’t convert unilateral pricing decisions into coordinated action is more relevant than ever. The antitrust question isn’t “did the firm use an algorithm?” but rather “did the firm coordinate with rivals through that algorithm?”

What’s Next?

The political temptation following RealPage will be to target the technology itself, rather than the conduct the settlement actually addresses. But legislating against “algorithmic pricing” as a category would sweep far more broadly than antitrust law would.

Prohibiting or hobbling revenue management tools would undermine the functioning of airlines, logistics networks, online retail, property management, travel platforms, and utilities, all without advancing the core antitrust goal of preventing agreements in restraint of trade.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

John Reeves of Reeves Law LLC is a solo appellate lawyer based in St. Louis. He is a former assistant Missouri attorney general.

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