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| 1 minute read

FTC and DOJ confirm “same rules apply” in second statement of interest regarding algorithmic price-fixing claims

The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ and, together with the FTC, the agencies) recently filed a statement of interest in the hotel price-fixing case Cornish-Adebiyi v. Caesars Entertainment. In the case, the plaintiffs allege that the defendant casino hotels violated the Sherman Act by agreeing to use the Rainmaker pricing algorithm platform to fix prices of hotel rooms in Atlantic City, New Jersey.

In general, the statement of interest affirms the agencies’ view that all horizontal price-fixing conduct – whether done by persons or indirectly via common algorithms – is per se unlawful and must be judged under the same existing precedent. As described in the accompanying press release, businesses “cannot use an algorithm to engage in practices that would be illegal if done by a real person.” The statement of interest also addresses two purported “legal errors” that the agencies say the defendants made in their motion to dismiss: (1) the defendants’ argument that the plaintiffs must identify direct communications between the hotels, and (2) their assertion that there can be no actionable price-fixing claim because the recommendations generated by Rainmaker’s pricing algorithm are not binding. Instead, the agencies contend that Section 1 of the Sherman Act reaches both tacit and express agreements and does not require proof of direct communications among competitors. Further, the agencies note that any agreement to fix the starting point of prices is unlawful, regardless of the prices competitors ultimately charge.

The statement of interest in Cornish-Adebiyi comes on the heels of the agencies’ statement of interest in an algorithmic price-fixing case in the residential housing market, demonstrating the antitrust enforcers’ intensifying efforts to contain the use of price-fixing algorithms in a variety of industries. The strength of the FTC and DOJ’s arguments likely will be tested in the court’s forthcoming ruling on the motion to dismiss in Cornish-Adebiyi, which the defendants filed in late February.

In the current enforcement environment, it is more important than ever that companies work closely with experienced antitrust counsel in evaluating the implications of their strategic business decisions under the antitrust laws. To learn more about our experience, please contact any of the authors or the Reed Smith lawyer with whom you regularly work.


antitrust, ai, antitrust and competition, hospitality