Led by a Democratic Attorney General, Arizona is emerging as a key player in the enforcement of federal and state antitrust laws that aim to prevent anticompetitive business conduct. From the burgeoning real estate and rental housing markets to the tech industry, businesses and consumers can expect many developments in the antitrust landscape as courts grapple to strike a balance between innovation and competition. Through Arizona’s adoption of the Uniform State Antitrust Act, federal court analysis of the antitrust laws guides Arizona state court interpretations of the state antitrust laws. This necessarily makes federal courts’ resolution of high-profile antitrust cases against defendants like Apple and Live Nation even more relevant to Arizonans, as federal outcomes can directly influence the effects of state antitrust laws. 

Background on Arizona’s Antitrust Law

In 1974, then-State Senator Sandra Day O’Connor introduced the Uniform State Antitrust Act in Arizona, which replaced an existing statute and has not been amended (Arizona Revised Statutes (ARS) Title 44, Chapter 10, Article 1). Candidly, the Arizona Antitrust Act is just as vague as the Sherman Act, the Clayton Act, and the Federal Trade Commission (FTC) Act. It nevertheless expressly provides that uniformity with federal antitrust laws should be an interpretative guide for state courts: “This article shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this article among those states that enact it. It is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.” (ARS § 44-1412).

Largely, since the adoption of the 1974 Act, Arizona courts have followed federal courts in interpreting Arizona antitrust laws. (See, for example, Three Phoenix Co. v Pace Indus., Inc., 135 Ariz. 113, 118–19, 659 P.2d 1258, 1263–64 (1983) (applying federal antitrust case law, the per se rule applies to horizontal market division (although it was not clear the restraint constituted a horizontal market division agreement) and cases cited therein)). The key exception to this uniformity rule is that Arizona permits indirect purchasers to pursue antitrust claims. (Bunker’s Glass Co. v Pilkington PLC, 206 Ariz. 9, 19, 75 P.3d 99, 109 (2003)). This decision was largely premised on the Arizona Constitution, which provides that a “person... injured... by [an antitrust violation] may bring an action for... damages sustained.” (Ariz. Const. art. 14, § 15).

Algorithm-Based Price Fixing Conspiracy in the Rental Housing Market

Bearing in mind that statutory backdrop, Arizona courts are set to play an active role in addressing antitrust litigation in the rental housing context. This came about through Arizona Attorney General Kristin Mayes’ commencement of an antitrust action on behalf of the State against RealPage, Inc. and nine rental property lessors in Arizona. Set at the cross-section of the rental-housing industry and market participants’ use of emerging technologies, multifamily housing lessors’ common utilisation of revenue management software is an expected focal point in the antitrust field for years to come.

Brought in the Superior Court of Arizona in Maricopa County, the complaint alleges that the lessor defendants entered into a hub-and-spoke conspiracy centred around RealPage to charge monopolistic prices. (Arizona, ex rel. Kristin K. Mayes v RealPage, Inc. et al., (Case No. CV2024-003889)). Specifically, the State alleges the lessor defendants collectively agreed to provide RealPage with their respective pricing and occupancy data, which RealPage then feeds into an algorithm. RealPage’s algorithm provides each lessor with pricing on their specific units, which the lessor defendants allegedly agreed to accept and follow. That is, the lessor defendants are allegedly outsourcing their pricing authority to a common entity, which sets prices for all of the lessor defendants. The State further alleges the lessor defendants forego high rates of occupancy in exchange for the monopolistic pricing RealPage provides. Such monopolistic pricing is only possible if the alleged conspirators all adhere to RealPage’s pricing. To that end, RealPage allegedly seeks to promote and enforce compliance with its provided pricing. The alleged result of the conspiracy is significantly higher prices for renters in Arizona.

Given the novel dynamics of the alleged conspiracy, Arizona courts are likely to look to federal court applications of the antitrust laws to algorithm-based conspiracies. Indeed, the Arizona Uniform Antitrust Act encourages such guidance, stating “[i]t is the intent of the legislature that in construing this article, the courts may use as a guide interpretations given by the federal courts to comparable federal antitrust statutes.” (ARS § 44-1412). The novel aspects of the alleged conspiracy, however, frustrate harmonised applications of the antitrust laws.

In adjudicating the antitrust claim, Arizona courts can choose to follow one of two divergent analytical frameworks presently applied to algorithm-based conspiracy claims. Such analytical frameworks address the “crucial question” of a conspiracy claim: whether an agreement exists. (Bell Atl. Corp. v Twombly, 550 U.S. 544, 553 (2007) (quoting Theatre Enters., Inc. v Paramount Film Distrib. Corp., 346 U.S. 537, 540 (1954))). First, courts could follow the methodical, step-by-step approach deployed in the In re RealPage, Inc., Rental Software Antitrust Litigation multidistrict litigation proceeding. (Case No. 3:23-MD-03071, 2023 WL 9004806 (M.D. Tenn. 2023)). Second, courts could apply the more direct analysis utilised in Gibson v Cendyn Group, LLC, which assessed “the basic questions: who, did what, to whom (or with whom)... and when?” (Gibson v MGM Resorts Int’l., Case No. 2:23-CV-00140, 2023 WL 7025996 (D. Nev 2023) (quoting Kendall v Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008))). See also Gibson v Cendyn Grp., LLC, 2024 WL 2060260 (D. Nev 2024). Depending on the analytical approach utilised, Arizona courts and those across the country could reach different results, notwithstanding overlapping facts and themes across the algorithm-based conspiracy claims.

In re Realpage

The parallel private federal court actions concerning the alleged RealPage conspiracy will have obvious appeal for Arizona courts addressing the same hub-and-spoke conspiracy. The Judicial Panel on Multidistrict Litigation centralised the dozens of federal court actions in the Middle District of Tennessee for pretrial proceedings and discovery. On 28 December 2023, the court denied the lessor defendants’ motion to dismiss, permitting many of the claims to move forward.

In ruling that renters of multifamily housing properties that used RealPage revenue management software stated a valid claim, the court noted that direct evidence of an agreement is not needed at the pleading stage because “conspirators seldom make records of their illegal agreements.” (In re RealPage, 2023 WL 9004806 at *8 (quoting In re Se. Milk Antitrust Litig., 801 F. Supp. 2d 705, 714 (E.D. Tenn. 2011))). Instead, circumstantial evidence can be sufficient if it “include[s] both parallel conduct and at least one ‘plus factor.’” Parallel conduct between conspirators can consist of congruence of policies or pricing. “Plus factors” are recognised sets of circumstantial evidence that, when combined with parallel conduct, can create an inference of an unlawful agreement.

Addressing the alleged parallel conduct first, the court found an alleged parallel shift in strategy regarding rates of occupancy satisfied the parallel conduct prong of the analysis. (Id. at *12–13). Plaintiffs alleged that prior to widespread adoption of RealPage’s revenue management software, competing lessors sought to maximise occupancy so as to recoup fixed costs associated with vacant units while avoiding marginal costs associated with tenant turnover. Focusing on high occupancy placed downward pressure on prices as competing lessors sought to attract and keep tenants. After the widespread adoption of RealPage’s revenue management software, however, lessors utilising the software shifted focus to unit pricing and revenue. Under the new strategy, lessors tolerated higher rates of occupancy in exchange for higher per-unit pricing and revenue. That is, lessors were allegedly less willing to decrease prices, even if occupancy was high. Supported by a regression analysis purporting to show weakened correlation between occupancy and pricing, the court found plaintiffs sufficiently alleged parallel conduct.

Moving to the “plus factor” prong of the analysis, the court reviewed the alleged circumstantial evidence holistically and found the most compelling evidence were allegations that the lessor defendants collectively provided RealPage its “proprietary commercial data, knowing that RealPage would require the same from its horizontal competitors and use all of that data to recommend rental prices to its competitors.” (Id. at *15). Later described as “real-time pricing and supply data”, it is not clear the extent to which the allegedly provided information is non-public or proprietary because lessors disclose such information online for prospective renters’ review. Accepting such information as confidential, the court concluded that no lessor would contribute its sensitive information without first understanding that the other lessors would do the same. That is, without an agreement or understanding among the lessors in place, it would be against a given lessor’s interest to provide such information. The court found that parallel conduct in the face of such incentives, along with the other circumstantial evidence alleged, tended to prove an existing agreement.

In finding that plaintiffs alleged an agreement, the court turned to whether they also alleged an unreasonable restraint on trade. In doing so, courts use one of two standards: the per se standard or the Rule of Reason. Notably, the court stated it was merely assessing whether the allegations sufficiently pled an unreasonable restraint under either standard. If sufficient, both standards would be available following discovery.

The per se rule applies to “clear cut cases of trade restraints that are so unreasonably anticompetitive that they present straightforward questions for reviewing courts.” (Care Heating & Cooling, Inc. v Am. Standard, Inc., 427 F.3d 1008, 1012 (6th Cir. 2005)). The per se standard is typically applied to price-fixing conspiracies among horizontal competitors and hub-and-spoke conspiracies. Application of the per se standard ends the analysis – the conspirators’ intent or pro-competitive justifications are not considered.

Although the court did find an agreement among horizontal competitors, the court found that the plaintiffs did not allege a straightforward conspiracy warranting application of the per se standard. (In re RealPage, 2023 WL 9004806 at *23). Weighing against the finding of a straightforward conspiracy, the court noted plaintiffs did not allege the dates when the lessor defendants allegedly joined the conspiracy. Nor did plaintiffs allege a straightforward delegation of pricing authority because the lessor defendants override RealPage’s pricing recommendations as much as twenty percent of the time. The court found such imperfections precluded an application of the per se standard at the pleading stage.

Finally, the court held that plaintiffs adequately alleged an unreasonable restraint under the Rule of Reason standard. Under this standard, courts analyse the actual effect on competition in a relevant market. (Id. at *24). Finding plaintiffs adequately alleged anticompetitive effects in the multifamily housing market, such claims survived defendants’ motion to dismiss and were permitted to proceed to discovery. Following extensive discovery, the court will next assess whether the plaintiffs can produce sufficient evidence to create genuine issues of material facts on key issues and support their claims.

Gibson v Cendyn Group

Based on substantially similar theories as those pled in the In re RealPage proceedings, the plaintiffs in Gibson targeted an alleged hub-and-spoke conspiracy consisting of hotels located on the Las Vegas strip and a rental revenue management software vendor, Cendyn. Rather than deploying the step-by-step analytical framework used in In re RealPage – that is, first assessing parallel conduct, then the plus factors, then whether the alleged agreement was an unreasonable restraint – the District Court of Nevada more directly addressed whether the plaintiffs sufficiently alleged an agreement. In concluding the plaintiffs failed to plausibly allege an agreement, the court made three findings.

First, the court found that the failure to plead when the alleged conspiracy commenced “renders a tacit agreement implausible.” (Gibson v Cendyn Grp., LLC, 2024 WL 2060260 at *3). That is, while the In re RealPage court first found a plausibly alleged agreement and then addressed the failure to allege a timeframe of the conspiracy as part of the “unreasonable restraint” stage of the analysis, the court in Gibson found such deficiencies went directly to whether an agreement was plausibly pled. The absence of the allegations regarding the timing of each hotel’s alleged entry into the conspiracy cut against a finding of an agreement.

Second, the court held that plaintiffs failed to plausibly allege an agreement to delegate pricing authority to Cendyn. Again, the court in In re RealPage assessed this issue at the “unreasonable restraint” step, not when assessing whether an agreement was plausibly pled. Applying a dictionary definition of “delegate” – “[t]o send as a representative with authority to act” – the court found no such delegation occurred because hotels sometimes declined to use Cendyn’s recommended pricing. (Id. at *6. Such deviations rendered implausible the allegations regarding an agreement).

Finally, the court extensively analysed whether the alleged sharing of information with Cendyn evidenced a plausible agreement. Finding no allegations plausibly outlining the exchange of confidential information, the court concluded the complaint did not provide for a plausible inference of an agreement among the hotels. (Id. at *5). Although following different analytical frameworks, both the In re RealPage and Gibson courts agreed the absence of allegations regarding confidential information was the distinguishing factor.( Id. at *4, n.7; In re RealPage, 2023 WL 9004806 at *16). To be sure, the plaintiffs in Gibson did allege the hotels shared their confidential information with Cendyn. The court, however, found such allegations were conclusory and therefore declined to accept them as true when assessing whether plaintiffs stated a cognisable claim.

As noted above, it is not apparent whether the information allegedly shared in In re RealPage was actually confidential, given the online availability of current pricing and occupancy figures. Accordingly, the distinguishing factor could be better described as the respective courts’ treatment of imprecise allegations concerning the purportedly shared confidential information. The potentially divergent treatment could be the result of the different analytical frameworks applied: while the In re RealPage court analysed the information exchange issue as part of the holistic plus-factor step, the Gibson court reviewed the issue independently. In concluding the plaintiffs failed to allege when the conspiracy began, what the parties agreed to, and how the conspiracy would operate, the Gibson court concluded the antitrust claim was implausibly pled and dismissed the complaint with prejudice. The plaintiffs have appealed the dismissal to the Court of Appeals for the Ninth Circuit. The appellate court’s analysis will be relevant to Arizona state court’s application of the antitrust laws because Arizona federal courts fall within the Ninth Circuit’s jurisdiction.

Antitrust Litigation in the Real Estate Sector

Following recent national trends, the intersection between real estate and technology continues to be a hotbed of antitrust litigation in Arizona. At the tail end of 2023, Zillow Group, Inc. and ShowingTime.com, LLC – which Zillow acquired in 2021 – sued two Multiple Listings Services (MLS) and an MLS consortium under Sections 1 and 2 of the Sherman Act, in the U.S. District Court for the District of Arizona. (Zillow Grp., Inc. and ShowingTime.com, LLC v Ariz. Reg’l Multiple Listing Serv., Inc.; Multiple Listing Serv., Inc.; and MLS Aligned, LLC (D. Ariz., Case No. 2:23-cv-02701-MTL)). The crux of the lawsuit was the plaintiffs’ contention that the defendants were attempting to monopolise the market for real estate showing management services and conspiring to exclude ShowingTime, their competitor, from certain geographic markets. Alleging that the defendants conspired to remove access to the ShowingTime.com platform from their members’ online portals, plaintiffs urged that the defendants’ actions prevented real estate agents from using ShowingTime to schedule and manage real estate listings.

In February 2024, the defendants all moved to dismiss the lawsuit for failure to state a claim. The MLS consortium argued that both claims against it failed because plaintiffs did not allege an agreement amongst the defendants to exclude ShowingTime from any MLS member portal. In a separate motion to dismiss, the two MLS entities urged in part that neither Zillow nor ShowingTime had standing to sue because they failed to allege an antitrust injury. Identifying that the plaintiffs’ true grievance was with genuine competition in the market – rather than unlawful anticompetitive practices – defendants accused plaintiffs of weaponising antitrust laws to halt legal competition.

Both motions to dismiss were fully briefed. But the court never had the chance to address them, as the parties notified the court of an impending settlement in the days before the motions were set for oral argument. The settlement was finalised in early August 2024, and plaintiffs voluntarily dismissed their claims. Because the case resolved without substantive analysis from the court, it leaves the broader legal community wondering how the Arizona district court would come out on these intersectional issues. But with a fast growing population and booming construction industry, Arizona is sure to be presented with another opportunity to address antitrust laws in the real estate context before long.

Arizona Attorney General’s Office Antitrust Enforcement Against Tech Companies

Elected in 2022, Arizona’s Attorney General Kris Mayes has identified antitrust enforcement – particularly in the technology arena – as one of her priorities: “A competitive, fair marketplace promotes lower prices, higher quality goods and services and more options for consumers. My team and I at the Attorney General’s Office will continue to go after illegal and unfair business practices to protect Arizonans.” (Press Release, Arizona Attorney General, Attorney General Mayes Announces $700 Million Settlement with Google over Play Store Misconduct (19 December 2023), https://www.azag.gov/press-release/attorney-general-mayes-announces-700-million-settlement-google-over-play-store (last accessed 28 July 2024)).

Since taking office, Mayes has joined other states and the U.S. Department of Justice (DOJ) in federal antitrust lawsuits against tech giants like Apple (United States, et al. v Apple, Inc. (D. N.J. Case No. 2:24-cv-04055)) and most recently against Live Nation and Ticketmaster (United States, et al. v Live Nation Entm’t, Inc. and Ticketmaster, LLC (S.D.N.Y. Case No. 1:24-cv-03973)). Earlier this year, Arizona also independently brought two suits against Amazon under Arizona law. (Arizona, ex rel. Kristin K. Mayes v Amazon.com, Inc. (Case No. CV2024-011990); Arizona, ex rel. Kristin K. Mayes v Amazon.com, Inc. (Case No. CV2023-012081)). And last year, Mayes’s office was involved in the USD700 million settlement of an antitrust case against Google. (Utah et al. v Google, LLC (N.D. Cal. Case No. 3:21-cv-05227-JD)).

The lawsuits against Amazon, Apple, Live Nation, and Ticketmaster are in their mere infancy, as all were initiated within the last few months. In March 2024, Mayes joined the DOJ and fifteen other state and district attorneys general (later joined by four additional states) in a suit against Apple under Section 1 of the Sherman Act, in the U.S. District Court for the District of New Jersey. Accusing Apple of monopolising the smartphone market, the complaint characterises the lawsuit as “about freeing smartphone markets from Apple’s anticompetitive and exclusionary conduct and restoring competition to lower smartphone prices for consumers, reducing fees for developers, and preserving innovation for the future.” (Compl. at 4, United States, et al. v Apple, Inc. (D. N.J. Case No. 2:24-cv-04055) (filed 21 March 2024)).

Similarly, in May 2024, Arizona joined the DOJ and a bipartisan coalition of 29 other states and the District of Columbia in a lawsuit against Live Nation – owner of Ticketmaster – under Sections 1 and 2 of the Sherman Act. The plaintiffs allege that Live Nation monopolises the live music industry, controlling which artists perform at which venues, how and when fans can buy tickets, and what fees they must pay – all of which push potential competitors out of the music space. 

Finally, in May 2024, Mayes’s office brought two separate state-court suits against Amazon, relying on the Arizona Consumer Fraud Act and the Arizona Uniform State Antitrust Act. Both cases are pending in the Maricopa County Superior Court of the State of Arizona. One of the actions draws attention to Amazon Prime’s cancellation process, through which Amazon allegedly employs methods called “dark patterns” to misdirect consumers and discourage them from cancelling their Prime subscriptions. The second suit, on the other hand, is based on the company’s use of its “Buy Box algorithm”, through which Arizona alleges that Amazon tries to maximise its own profits while disfavouring other third-party sellers and forcing them to overcome additional obstacles if they wish to continue doing business with the company. These lawsuits are separate from a federal action brought by the Federal Trade Commission against Amazon in the Western District of Washington, which is set for trial in October 2026. (FTC et al. v Amazon.com, Inc. (W.D. Wash. Case No. 2:23-cv-01495)).

Arizona Attorney General’s Office Merger Enforcement

In addition to Attorney General Meyes’ participation in conduct cases involving tech companies, the Attorney General’s office is joining efforts relating to merger enforcement. On 26 February 2024, Arizona joined the Federal Trade Commission and eight states in suing to block Kroger Company’s USD24.6 billion acquisition of competing supermarket Albertsons Companies (Inc. FTC et al. v The Kroger Co. and Albertsons Cos., Inc. (D. Or., Case No. 24-cv-00347)). The FTC and joining states also issued an administrative complaint before the Federal Trade Commission. If completed, the merger would unify more than 5,000 supermarket stores and employ nearly 700,000 employees, including 250 stores and 35,000 employees in Arizona.

Alongside concerns regarding harm to consumers – including higher prices and lower quality products and services – the merger’s impact on labour is a chief concern. The FTC and joining states specifically raised concern regarding the merger’s impact on organised labour. The merger enforcement could indicate an increased effort from the Arizona Attorney General’s office to challenge mergers, particularly when a merger potentially simultaneously harms consumers and workers. Moving forward, businesses should continue to assess Attorney General Mayes’ alignment with the federal enforcers, particularly following the outcome of the 2024 presidential election.