MIL-OSI USA: Reps. Jesús “Chuy” García and Becca Balint Introduce Legislation to Crack Down on Companies Exacerbating Rental Housing Crisis Through Price-Fixing Algorithms

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Source: United States House of Representatives – Representative Jesús Chuy García (IL-04)

WASHINGTON, D.C – Rep. Jesús “Chuy” García (IL-04) and Rep. Becca Balint (VT-AL) introduced thePreventing Algorithmic Facilitation of Rental Housing Cartels Act, legislation to prohibit digital price fixing by landlords. In the midst of an urgent housing supply and affordability crisis, many housing providers are using algorithms to collude to further increase rents for working families. Rents across the country have gone up nearly 30%, and housing costs remain one of the highest inflation indicators. The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act was introduced by Senators Welch and Wyden earlier this year.

Reporting shows how companies like RealPage and Yardi advertise their products as “property management software,” but in reality help landlords in coordinating prices to increase rents (by between (5% and 12%), resulting in less competition and higher rent prices for consumers. This is exactly how a price-fixing cartel operates, but instead of using code names and secret meetings, the price-fixing is offered as a service.

Companies have argued that the Sherman Act, the original antitrust law passed in 1890, is inapplicable because machines cannot contract or collude in the same way as humans. This egregious behavior by many of the nation’s biggest landlords has been challenged by renters nationwide, the D.C. Attorney General, and the U.S. Department of Justice.

“Two years ago, I led a letter urging the Department of Justice to look at rental price-fixing algorithms, which are exacerbating the housing crisis and raising the cost of living for many of my constituents. The Department has since started a criminal investigation—and today, I’m proud to join my colleague Rep. Balint in introducing this bill to ban algorithmic price-fixing and protect renters from this new frontier of anticompetitive, anti-consumer behavior,” said Rep. Jesús “Chuy” García.

“Vermonters are feeling the crushing burden of the housing crisis. And predatory tech companies are taking advantage of working families by coordinating between landlords to increase rents,” said Rep. Becca Balint. Corporate greed continues to exacerbate the housing affordability crisis in this country. We cannot allow corporations to continue to drive up their profits by illegally hiking already high rent. I’m proud to work alongside Rep. García to crack down on corporate greed in the rental market and ensure American families have access to affordable housing options.”

 “Vermonters are amongst the hardest hit by the housing crisis raging across the country. We have the second-highest rate of homelessness in the nation. In the midst of this crisis and at a time when families are struggling to put food on the table, housing providers are using anti-competitive pricing algorithms to raise rents. It’s outrageous. Our bicameral Preventing the Algorithmic Facilitation of Rental Housing Cartels Act would crack down on these pricing algorithms and prevent future monopolies on the housing market to protect renters in Vermont and nationwide,” said Senator Welch.

The Preventing Algorithmic Facilitation of Rental Housing Cartels Actwould:

  • Make it unlawful for rental property owners to contract for the services of a company that coordinates rental housing prices and supply information, and designate such arrangements a per se violation of the Sherman Act;
  • Prohibit the practice of coordinating price, supply, and other rental housing information among two or more rental property owners;
  • Make it unlawful for two or more coordinators to merge where a merger creates an appreciable risk of materially lessening competition; and
  • Allow individual plaintiffs to invalidate any pre-dispute arbitration agreement or pre-dispute joint action waiver that would prevent their bringing a suit under this act.

The bill is builds on Rep. García’s previous Congressional sign-on letter urging the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to investigate the anticompetitive nature of price-fixing algorithms after a ProPublica investigation brought these practices to light. DOJ has since opened a criminal investigation

The Preventing the Algorithmic Facilitation of Rental Housing Cartels Act is cosponsored by Reps. Watson Coleman, Norton, Nadler, Johnson (GA), Gomez, Omar, Jayapal.

The bill is endorsed by the American Economic Liberties Project, the National Low Income Housing Coalition, and the National Alliance to End Homelessness.

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