The Competition Bureau Canada’s recently concluded civil investigation into the adoption of algorithmic pricing software within the country’s rental housing market has found that landlords have not used revenue management tools widely enough to harm competition substantially.
According to a news release, based on the Bureau’s analysis of the evidence:
- The landlords’ adoption of revenue management tools did not meet the anticompetitive thresholds to constitute a violation of the Competition Act, 1985
- RealPage Canada, Inc. and Yardi Canada, Ltd. – the providers of such tools – did not engage in an abuse of dominance or anticompetitive collaboration
RealPage Canada is an affiliate of RealPage, Inc., a software company based in Texas, US. On the other hand, Yardi Canada is an affiliate of Yardi Systems Inc., a software company headquartered in California, US.
Despite finding no competition law breaches, the Bureau expressed concerns regarding the possible consequences of algorithmic pricing tools on competition within the multi-family rental housing market.
Background
The Bureau’s news release provided more context regarding its investigation.
After their introduction in Canada, the adoption of RealPage’s and Yardi’s revenue management tools gradually became more common. However, the public began scrutinizing the use of these tools and raised concerns.
Thus, beginning late last year, landlords across the country have significantly decreased their utilization of such tools.
Guidance
In its news release, the Bureau shared that it has released guidance relevant to industry participants – including landlords, property managers, and software providers – to promote compliance with the Competition Act.
In the guidance, the Bureau called on landlords to review software features to ensure compliance with competition legislation. The Bureau also urged software providers to review the guidance to ensure their product offerings avoid features breaching the law.
The Bureau listed the following questions to ask when conducting such reviews:
- Is the revenue management software using non-public or competitively sensitive information from your competitors to calculate prices?
- Does the software make it more challenging for you to reject or override price recommendations than to accept or implement them? Do you encounter any penalties for rejecting or overriding price recommendations?
- Are there features of the software that seem to artificially inflate price recommendations?
- Does your software provider disclose any non-public, commercially sensitive information about your competitors during your interactions and communications?
In its news release, the Bureau said it would keep monitoring the rental housing market and any developments potentially jeopardizing competition in this sector and would respond with appropriate steps to ensure fair competition within the market if it sees evidence of anticompetitive conduct.