DOJ and FTC File Statement of Interest in Hotel Pricing Collusion Lawsuit

The Federal Trade Commission (FTC) and the Justice Department’s Antitrust Division are taking an interest in a lawsuit over hotel room price collusion.

The two federal agencies have filed what’s known as a “statement of interest” with the District of New Jersey in the case of Cornish-Adebivi v. Ceasar’s Entertainment, according to a press release issued by the FTC.

In the release, the FTC explains that “hotels cannot collude on room pricing and cannot use an algorithm to engage in practices that would be illegal if done by a real person.” An increasing number of companies, regardless of the industry, are relying on algorithms to determine prices, according to the FTC.

“When a small group of algorithm providers can influence a major segment of a market, competitors are better able to use the algorithm provider to facilitate collusion,” says the FTC release. “This risk is even greater as markets have become more concentrated across a wide range of industries.”

Algorithms that recommend prices to numerous competing hotels make it harder for travelers to comparison-shop for the best rate, adds the FTC.

The statement of interest filed by the FTC and DOJ makes clear that the government’s position is that hotels using algorithms to set room prices are violating antitrust laws. The filing was made in support of plaintiffs that are suing Caesars Entertainment and other casinos.

That class action case, filed by a group of New Jersey residents, alleges that several hotels engaged in an illegal price-fixing conspiracy with the use of a common pricing algorithm to set hotel room rates.  Plaintiffs are hoping to establish that the hotels operated in violation of Section 1 of the Sherman Act, a law that bars "conspiracy in restraint of trade," according to The Verge.

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