U.S. law enforcement officials say algorithms can help price collusion even if no one is actually talking to each other

U.S. antitrust enforcement agencies say algorithms may help restaurants illegally price-fix, even if people at those businesses don’t actually talk to each other about the issues.

The Department of Justice and the Federal Trade Commission jointly filed a statement of interest Cornwall-Adebiyi v. Caesars Entertainment Inc., Case filed in U.S. District Court for the District of New Jersey. The class-action lawsuit was filed by New Jersey residents who rented rooms at Atlantic City hotels and hotels. Several of the hotels were allegedly involved in an illegal price-fixing conspiracy By using a common pricing algorithm.

Defendant seeks to prove hotel violated rules Sherman Act 1The Act prohibits “conspiracy to restrain trade” and is used to criminalize illegal price fixing. They said the hotel apparently used a pricing algorithm platform called Rainmaker, knew its competitors were also using it, and chose it accordingly.

These agencies do care about how to deal with this problem.”The judicial treatment of the use of algorithms in price fixing is of tremendous practical importance,” the Justice Department and FTC wrote in a statement. They have filed similar claims cases in other algorithmic price fixings, such as one lawsuit Targeting rental property management software company RealPage. Tenants blame the company causing rental prices to rise By obtaining and using non-public pricing data from landlords.

In the restaurant case, the Justice Department and the Federal Trade Commission are challenging two claims made by the restaurant in an attempt to have the lawsuit dismissed. One of the claims was that the defendants needed to allege direct communication between the hotels to reasonably prove Sherman’s violation. Another is that the lawsuit should be dismissed because the pricing algorithm only produces recommendations, not binding price demands.

Law enforcement officials say this is all wrong.[T]The law does not require criminals to allege specific communications between competitors solely for the purpose of alleging an agreement under Article 1,” they wrote. “As long as the algorithm provider and its competing customers are connected in a ‘unified’ manner through this common agency, by purpose or common design and understanding,’… they are acting in unison.” “

They also said it did not matter that the algorithm’s recommendations were not binding. They said the precedent of Section 1 of the Sherman Act shows that it is illegal to fix a bid or price, “even if the price ultimately charged is different.”

“Defendants’ position is also inconsistent with case law, which states that it is the agreement that is violated, not the frequency with which it is adhered to,” the agencies wrote. From the hotel’s perspective, price-fixing cartels may seek to Avoiding penalties “simply involves inviting some competitors who tend to deviate from the fixed price to participate or agreeing to allow some deviations.”

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