Feds Jump Into Algorithmic Pricing Suit, Say Collusion Can Occur Without Humans Uttering a Word
The Department of Justice and Federal Trade Commission are worried that the growing use of algorithms is making price fixing increasingly difficult to detect—and that the use of AI to create ever-more-sophisticated algorithms will exacerbate that challenge.
March 29, 2024 at 06:23 AM
4 minute read
The original version of this story was published on Corporate Counsel
What You Need to Know
- A class-action lawsuit filed last year alleged that Atlantic City hotels engaged in price fixing by knowingly adopting the same algorithmic pricing platform.
- The defendants want the suit dismissed, saying plaintiffs failed to meet their burden of showing when or how conspirators arranged their scheme.
- The DOJ and FTC say the defendants have no such burden and can prevail without showing the hotels even communicated.
Caesars Atlantic City. Federal antitrust enforcers say competing casino hotels illegally colluded to set room rates by knowingly adopting the same algorithmic pricing platform, a tacit agreement that amounts to an antitrust violation, even if the hotels never communicated directly.
The Federal Trade Commission and Department of Justice filed a statement of interest late Thursday in Cornish-Adebiyi v. Caesars Entertainment, where a class of New Jersey hotel guests claim they paid "supracompetitive" prices for rooms at Caesars Atlantic City Hotel & Casino and the Hard Rock Hotel & Casino Atlantic City. The suit, filed in May 2023, says the prices were driven by an algorithmic pricing platform called Rainmaker that analyzes real-time data about market supply and demand to generate "optimal" room rates.
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