ES
IT
PT
DE
NL
The US Court of Appeals for the Third Circuit has revived a class action alleging that several Atlantic City casino-hotels used common revenue management software to coordinate hotel room prices, creating a significant new precedent for antitrust cases involving algorithmic pricing.
The case, Cornish-Adebiyi v. Caesars Entertainment, centres on allegations that Cendyn’s Rainmaker pricing platform acted as a coordinating mechanism by using confidential hotel data to generate pricing recommendations shared across competing casino operators.
The Third Circuit overturned an earlier decision by the District of New Jersey that dismissed the claims, finding the plaintiffs had plausibly alleged an agreement sufficient to allow the case to proceed.
In its ruling, the appeals court rejected several arguments that have previously led to the dismissal of similar lawsuits involving algorithmic pricing software.
The court held that operators adopting the same pricing platform over an extended period did not preclude allegations of collusion, despite some casino-hotels implementing the software years apart. It also found that allegations of a high level of compliance with the software’s pricing recommendations – reportedly around 90 per cent – could support an inference of coordinated conduct, even where operators retained the ability to override suggested prices.
The judges also concluded that plaintiffs were not required to explain the detailed workings of Cendyn’s proprietary algorithm at the pleading stage, ruling that such information would generally only become available through the discovery process.
The decision further accepted allegations that Atlantic City casino-hotels maintained higher room rates despite declining occupancy as a potential “plus factor” supporting claims of coordinated pricing, alongside marketing statements suggesting the software helped operators avoid price wars.
The ruling differs from several earlier decisions in comparable cases involving algorithmic pricing software and is expected to create a split among US federal appellate courts on how antitrust law should be applied to AI-driven revenue management platforms.
While the Third Circuit stopped short of declaring algorithmic pricing software inherently unlawful, the decision is expected to increase scrutiny of businesses using shared pricing platforms and strengthen antitrust challenges where competitors rely on common software to generate pricing recommendations.
