The average monthly rent for a one-bedroom across the country was $1,876 in February, according to Rentals.ca.Adrian Wyld/The Canadian Press
The federal Competition Bureau is investigating the use of algorithmic pricing in the country’s home rental market, targeting a practice that some Canadian politicians and renter advocates say is inflating monthly rents.
The probe is continuing and the Competition Bureau said Tuesday it would take action if it found any evidence that would raise concerns.
The pricing practice allegedly allows landlords to use software to track what their competitors are charging for rent so they can set their prices accordingly instead of competing against each other with lower rental rates.
“I can confirm that the Bureau’s investigation into algorithmic pricing in the Canadian real estate rental market is ongoing,” bureau spokesperson Cloé Bouchard said in an e-mailed statement. “If we find evidence of activities that could raise concerns under the law, we will take action.”
The practice came into the spotlight last summer after the U.S. Department of Justice accused Texas-based RealPage Inc. of breaking competition laws by using algorithmic data to help landlords collude to pump up rental prices.
According to the DOJ’s legal filings, RealPage allegedly allows landlords to submit competitive, sensitive information to RealPage’s platform. That includes details on lease terms, rental rates and future occupancy.
RealPage feeds all the information to an algorithm and then provides landlords with current pricing recommendations that are based on their rivals’ data, according to the documents filed in court. The lawsuit alleges the RealPage software enables landlords to “sidestep vigorous competition to win renters’ business.”
“RealPage replaces competition with co-ordination. It substitutes unity for rivalry. It subverts competition and the competitive process. It does so openly and directly – and American renters are left paying the price,” said the lawsuit, which was filed in August under then-president Joe Biden.
In January, the DOJ added six more real estate companies to the case, including a handful that have operations in Canada or have connections with Canadian pension funds. That includes Illinois-based Cushman & Wakefield, a commercial real estate services firm with operations in Canada; Georgia-headquartered Cortland Management LLC, which has partnered with Canada Pension Plan Investment Board and another firm to acquire apartment buildings in the U.S.; and Willow Bridge Property Company, a U.S. property management firm owned by Ontario Teachers’ Pension Plan.
The Canadian pension funds declined to comment.
RealPage has argued that the court should dismiss the lawsuit in part because the Justice Department has failed to prove firstly that its software was anti-competitive and secondly that RealPage has or is close to having monopoly power.
Ms. Bouchard said the Competition Bureau is aware of probes outside of Canada but added: “As the Bureau is an independent law enforcement agency, and is required by law to conduct its work confidentially, it would be inappropriate for the Bureau to comment on this matter.”
The Breach, an independent Canadian news website, first reported the Competition Bureau probe. The Breach and the CBC have reported instances in Canada where landlords have used RealPage’s software called YieldStar to determine rents.
Although rental rates have started to decline in some parts of the country, the cost of rent is still out of reach for many residents. The average monthly rent for a one-bedroom across the country was $1,876 in February, according to Rentals.ca. And the cost is more than $2,000 a month in at least a dozen cities, from Toronto and Vancouver to Halifax and Waterloo, Ont.
Liberal Party leadership contender Chrystia Freeland has said she would ban the practice. In a statement released on her website on Monday, she accused corporate landlords of using artificial intelligence to analyze renters’ information to collude, set rates and squeeze renters.
Federal Industry Minister François-Philippe Champagne publicly said last fall that he would ask the head of the Competition Bureau to investigate the price-setting algorithm practice.