Algorithms Can Aid Price Collusion, Even If No Humans Actually Talk To Each Other, US Enforcers Say

Algorithms might help hotels illegally collude on prices, even if no humans from those businesses actually talk to each other about them, according to US antitrust enforcers. From a report: The Department of Justice and Federal Trade Commission jointly submitted a statement of interest in Cornish-Adebiyi v. Caesars Entertainment, a case brought before the US District Court of New Jersey. The class action case was brought by New Jersey residents who rented rooms in Atlantic City hotels and alleged that several of those hotels engaged in an illegal price-fixing conspiracy through the use of a common pricing algorithm.

The plaintiffs are trying to show that the hotels violated Section 1 of the Sherman Act, which prohibits 'conspiracy in restraint of trade' and is used to prosecute illegal price-fixing. They say that the hotels allegedly used a pricing algorithm platform called Rainmaker, knowing that their competitors were also using the platform and choosing it for that reason. The agencies really care about how this issue is handled. 'Judicial treatment of the use of algorithms in price fixing has tremendous practical importance,' the DOJ and FTC write in their statement.

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