FTC and DOJ Say That Using Same Algorithm For Pricing Can Still Violate Antitrust

A few months back, there was a lawsuit filed by Atlantic City, New Jersey tourists alleging that casinos in the area with hotel rooms were price-fixing the rooms, and now, the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice have weighed in. 

The FTC and Antitrust Division of the Department of Justice have officially filed a “Statement of Interest,” which, more or less, aligns them with the plaintiffs in the case. This case could ultimately lead to financial penalties for places like MGM Resorts International, Hard Rock International, and Caesars Entertainment which also offer NJ online casinos. All of these places were named as co-defendants in the lawsuit. 

As for the suit, it claimed that the co-defendants listed above used algorithms to collude unfairly and price rooms accordingly. 

The DOJ and FTC argue that, even if the casinos mentioned never formally communicated about the collusion, the use of the same algorithm could still violate antitrust law.

Casinos in Question

Here are the casinos owned by those mentioned above: 

• Caesars Entertainment: Caesars Atlantic City, Harrah’s Atlantic City, and Tropicana Atlantic City
• MGM: Borgata Atlantic City
• Hard Rock: Hard Rock Atlantic City 

In addition to these outlets being sued, the booking technology company, Cendyn Group, is also being sued for damages. 

In the suit, the plaintiffs say that the pricing set forth by Cendyn’s software used by these resorts led to “supra-competitive prices.”

In a joint statement, the FTC and DOJ said, “Competitors cannot lawfully cooperate in setting their prices, whether via their staff or an algorithm, even if the competitors never communicate with each other directly.”

They added, “Setting or recommending initial starting prices can still violate the antitrust laws even if those are not the prices that consumers ultimately pay.”