Zags Roofing, a small roofing contractor based in Northbrook, Ill., filed a lawsuit in federal court April 2 against equipment pricing and information services Rouse Services and its corporate parent Ritchie Bros. Global, the auctioneer/data provider; as well as equipment rental firms United Rentals, Sunstate Rentals, Sunbelt Rentals, Herc Rentals and its corporate parent Herc Holdings and H&E Equipment Services, alleging all of them colluded to increase rental prices for construction equipment.

The novel lawsuit seeks class action status and alleges that the class of companies that rent construction equipment are being damaged by RB Global. and its wholly owned subsidiary Rouse Services as well as the major construction equipment rental companies in the nation who  “[conspiring] to artificially increase construction equipment rental prices nationwide” in violation of the Sherman Antitrust Act. It further accuses the rental companies and Ritchie Bros. of creating a cartel to facilitate those aims.

“The equipment at issue—lifts, dozers, excavators, hoes, steers, compaction equipment, loaders, and the like—is used in residential and commercial construction… Defendants’ conspiracy—a price-fixing scheme orchestrated by Rouse—has artificially inflated the cost of renting construction equipment to individuals and entities.” It alleges that prior to 2011, the construction equipment rental industry was fragmented and characterized by price competition that generally favored renters as each rental company’s unilateral interest in competing for rental volume led to lower prices, resulting in periods of broad price declines. After 2011, the lawsuit alleges industry consolidation after increasingly concentrated the largest construction equipment rental companies in the nation down to the named defendants and their collective market share increased from approximately a quarter of the industry to the majority of the industry.

Calling the group the “Rouse Cartel,” the complaint states that Herc and H&E were founding members of the group in 2011 and, by 2015, Sunstate Equipment—along with more than 40 other rental equipment companies—had joined. Sunbelt joined shortly thereafter. It accuses all of the rental companies named of setting their equipment rental rates by Rouse Services recommendations and not by market forces. 

It further accuses all of the rental companies named of a “continuing horizontal agreement” between themselves, Rouse Services and RB Global. They do so, the lawsuit states, via Rouse using a proprietary, common formula to calculate the RRI Price for its rental company clients. The formula includes the clients’ pooled CSI data, Rouse’s assessment of seasonality of demand, and Rouse’s view of market conditions. The lawsuit claims the companies can manipulate all of these RRI price inputs. Subscribers to Rouse Services say it provides them pricing data that helps them determine if their rental sales staffs are charging appropriate rates for equipment rentals in hundreds of markets nationwide.

The lawsuit is seeking unspecified monetary damages under antitrust law, as well as a court order to break up the alleged price-fixing conspiracy.

RB Global said in a statement that the lawsuit’s “claims are meritless and mischaracterize Rouse Rental Insights’ business practices and the competitive nature of the rental industry. Rouse Rental Insights is purposefully configured to comply with all regulations, including competition and antitrust laws. We intend to vigorously defend the company.”

Elizabeth Grenfell, vice president of investor relations at United Rentals, said in a statement that the company believes the allegations are “wholly without merit” and that UR intends to vigorously defend itself in federal court in Northern Illinois. Sunbelt also released a statement saying that the lawsuit is meritless.

If the lawsuit is granted class status, plaintiffs’ attorneys said there could, potentially, be thousands of small contractors who could join the class as plaintiffs.