| David O. Fisher
Price Fixing, Section 1 of the Sherman Act, Digital Technology
On October 9, 2025, the American Antitrust Institute (AAI) filed an amicus brief urging the Ninth Circuit Court of Appeals to grant rehearing en banc in Gibson v. Cendyn Grp., Inc. (9th Cir. No. 24-3576).
The plaintiffs in Gibson allege that defendants, hotels on the Las Vegas strip, licensed the same third-party pricing algorithm, which used the hotels’ non-public, commercially sensitive pricing information to make pricing and vacancy recommendations that had the effect of reducing room occupancy and driving up prices. The district court dismissed the case, and AAI filed an amicus brief urging the Ninth Circuit to reverse. A panel of the Ninth Circuit affirmed, insisting that plaintiffs must plead and prove a causal link between the hotels’ licensing agreements and a “restraint” in the relevant market. The panel concluded that the licensing agreements were not vertical agreements but “ordinary sales contracts” which need not be reviewed under the rule of reason.
In its brief supporting rehearing en banc, AAI points out fundamental errors in the panel’s reasoning. By insisting on a causal link between the licensing agreements and a restraint in the relevant market, the panel confused proof of an agreement with proof of the agreement’s effects on competition. As AAI’s brief explains, black letter antitrust law dating back over one hundred years holds that all agreements restrain trade, such that insisting on a causal connection between “an agreement and a restraint” makes no sense. Instead, the panel should have focused on whether there was a causal link between the licensing agreements and anticompetitive effects in the relevant market. The panel’s confusion between a restraint and its effects caused it to disregard the plaintiffs’ well-pleaded allegations that the licensing agreements caused prices to increase and occupancy to decrease in the relevant market. And it leads to the absurd conclusion that, because they do not “cause a restraint” in the relevant market, vertical agreements can never violate Section 1.
AAI also argues that, beyond the fundamental errors in the panel’s reasoning, the opinion merits en banc rehearing because it conflicts with Supreme Court precedent on an issue of exceptional public importance. By creating a new category of agreements which are not subject to rule-of-reason analysis, the panel opinion conflicts with Board of Trade of the City of Chicago v. United States, 246 U.S. 231 (1918), which held that that an agreement must be tested under the rule of reason to determine whether it restrains trade unreasonably in violation of Section 1. AAI also explains that competitors’ use of the same third-party pricing software is an increasingly common feature of the economy, and that the panel opinion would exempt this practice from antitrust scrutiny despite a consensus among experts that it can raise prices and facilitate collusion.
The brief was written by AAI Senior Counsel David O. Fisher, with assistance from AAI President Randy Stutz and AAI Vice President and Director of Legal Advocacy Kathleen Bradish.
Read the full brief: AAI Amicus Brief in Gibson v. Cendyn
