AAI has filed an amicus brief in Gibson et al. v. Cendyn Group, Inc., et al., urging the Ninth Circuit to reverse the dismissal of a class action suit against six hotel companies and a revenue-management software company (Rainmaker and its parent company Cendyn) for colluding to raise the prices of hotels on the Las Vegas strip.
The suit alleges that the Las Vegas hotels knowingly shared commercially sensitive information with Cendyn’s pricing algorithm, which used that information to make pricing and vacancy recommendations, and that the hotels’ near-universal acceptance of those recommendations raised the prices of hotel rooms on the strip above competitive levels. The district court dismissed the complaint for failing to satisfy the concerted-action requirement under Section 1 of the Sherman Act, emphasizing that the hotels contracted with Cendyn at different times, did not share the information directly with each other, and did not commit to accepting the algorithm’s recommendations in all cases.
In its brief, AAI argues that the district court’s formalistic analysis relied on plus factors that courts have traditionally used to identify human collusion, but which are not helpful in identifying algorithmic collusion. Such an approach effectively immunizes algorithmic price-fixing and threatens substantial consumer harm as AI becomes an increasingly common feature of our economy.
AAI’s brief explains that software powered by AI can help firms monitor and predict each other’s behavior in ways that were not previously possible. Rivals who contract with the same software provider can collude tacitly on price and output without communicating directly or making express agreements with each other. The brief argues that the antitrust laws were designed to be flexible enough to distinguish between procompetitive and anticompetitive uses of new technologies like AI, and long-standing Supreme Court precedent requires courts to focus on competitive realities rather than formalistic distinctions.
The brief was written by AAI Senior Counsel David Fisher and Berger Montague Associate Matt Summers, with assistance from AAI President Randy Stutz and AAI Board Member and Berger Montague Shareholder Josh Davis.
Read the full brief here: AAI Amicus Brief in Gibson v. Cendyn Group