WASHINGTON - Today, the Open Markets Institute filed an amicus brief in Gibson v. Cendyn Group, a case on appeal before the Ninth Circuit. Visitors to Las Vegas allege that hotels on the Las Vegas Strip, working with software company Cendyn Group, conspired to fix prices on their rooms. 

Supporting the plaintiffs, the Open Markets brief urges the courts to apply longstanding law against collusion between competing firms, regardless of whether they do so directly or through a third party. The district court made critical errors of law in dismissing the case, including placing improper emphasis on the method of price fixing and its efficacy. 

“With the growth of extraordinary computing power and data processing capabilities, the ability of firms to work together to fix prices and take other coordinated actions for their collective benefit—at the expense of consumers, suppliers, and workers—is rapidly becoming more sophisticated and more difficult to detect,” the brief reads. “Courts must apply longstanding law against such collusive conduct and put firms on notice that this type of business behavior will not be tolerated regardless of the technology used.” 

The hotel defendants allegedly used Cendyn Group’s Rainmaker pricing algorithm to raise hotel prices on the Las Vegas Strip. The hotel defendants knew that Cendyn was working with their rivals and making pricing recommendations to them. What matters for antitrust purposes is the joint setting of prices by rivals, whether done by executives in the proverbial smoke-filled room or through one software company’s algorithm. 

The technology used is “irrelevant,” the brief explains.  

“The question is whether the businesses acted independently when making decisions. If the parties centralized their decision-making, that is price fixing and a violation of the law.” And corporations cannot escape liability by asserting their collusive scheme was not entirely successful.

Read the full brief here.