New Jersey’s War on Pricing Software Won’t Build More Apartments
When rents rise, blaming the algorithm is easier than building apartments. New Jersey has chosen the easier target.
On July 20, Gov. Mikie Sherrill signed the Forbidding the Algorithmic Inflation of Rent Act, or FAIR Act, declaring that landlords who use shared pricing tools are engaging in “collusion by algorithm.” The phrase is built for a press release. As an antitrust standard, it sweeps far too broadly.
Antitrust law already has a clear target. A software vendor can serve as the hub of a cartel by collecting competitively sensitive information, relaying rivals’ plans, pressuring users to accept common prices, restricting discounts, or helping participants detect and punish defections. If landlords use software to carry out an agreement that would be illegal around a conference table, the software offers no immunity. The U.S. Justice Department’s (DOJ) RealPage case and proposed settlements show the kind of conduct that warrants close scrutiny.
But shared pricing software, common data, and even some use of nonpublic information do not, by themselves, establish collusion. New Jersey has replaced a difficult, fact-intensive inquiry with a sweeping ban. The law may suppress tools that improve pricing accuracy, reduce costly errors, increase capacity use, and help firms respond to changing conditions.
The state has targeted a technology because it can facilitate unlawful coordination. Antitrust law should target the agreements and practices that suppress independent rivalry.
The rule is simple enough. Prosecute collusive agreements and the mechanisms that sustain them. Do not ban computation, common code, or nonpublic data merely because several firms use them.