- DOJ says use of algorithms can have anticompetitive effects
- Plaintiffs filed appeal after district court dismissed case
The Justice Department filed an amicus brief supporting customers who accused Ceasars Entertainment Inc. and other Las Vegas hotel companies of using algorithms to fix prices.
"Pricing algorithms can process more information more rapidly than humans aided by prior communications technologies," the DOJ said in a brief filed Thursday in the US Court of Appeals for the Ninth Circuit. "For this reason, such algorithms can increase the means and opportunities for collusion among competitors."
The Vegas case is the first of its kind to reach a federal appeals court and is expected to impact similar suits going forward.
A group of consumer plaintiffs who stayed at various Vegas hotels filed an appeal to the Ninth Circuit after Judge Miranda Du of the US District Court for the District of Nevada dismissed the case in May, saying they failed to plausibly allege a tacit agreement between the hotels to inflate room prices using algorithms built by the Rainmaker Group, a Cendyn Group LLC subsidiary.
In her ruling, Du said she reached her decision because the hotel-casinos signed up for the pricing software services at different times and the hotels weren't bound by the software's recommendations. A nearly identical suit accusing Atlantic City hotel-casinos was dismissed late last month on similar grounds.
The DOJ rejected Du's notion that the freedom to reject the software's pricing recommendations meant no collusion took place.
