Washington, DC – The Open Markets Institute filed an amicus brief in Cornish-Adebiyi v. Caesars, a case before the Third Circuit court in which casino hotels in Atlantic City allegedly used revenue management software from Cendyn Group to fix prices at high rates. This situation raises significant concerns about fair market practices and the implications of software-driven pricing strategies. Open Markets filed an amicus brief last fall in Gibson v. Cendyn Group, a similar case of software-enabled price-fixing among Las Vegas casino-hotels. This pattern of behavior in the hospitality industry, particularly in tourist-heavy areas, calls into question the ethics of using advanced technology for potential price manipulation.
Price fixing using Cendyn Group software not only affects consumers but can also lead to significant legal repercussions for the companies involved. As we delve deeper into the implications of the Cendyn Group’s software, it’s essential to understand how such practices can alter market dynamics. When prices are artificially inflated, customers often feel the brunt of these decisions, leading to a loss of trust in the hospitality industry. This can result in decreased customer loyalty and, ultimately, a decline in revenue for businesses that engage in these practices.
Cendyn Group
Are Myrtle Beach hotels also employing the Cendyn Group’s price-fixing software? This question is critical as it raises concerns about ethical pricing in one of the most popular vacation destinations in the United States. Tourists who visit Myrtle Beach expect fair pricing based on market demand and seasonal trends, not inflated rates due to collusion among hotel operators.
In both briefs, Open Markets urges the courts to apply longstanding laws against collusion between competing firms, regardless of whether they do so directly or through a third party. This is vital for protecting consumer rights and ensuring a competitive market landscape, which benefits everyone involved. The implications of such cases extend beyond just the hotels in question, as they could set precedents for how technology is utilized in pricing strategies across various industries.
In Cornish-Adebiyi v. Caesars, the argument presented is that the district court got it wrong: Casino-hotels were not acting independently when they used Cendyn’s software to raise hotel prices to supercompetitive levels, which is a per se price-fixing violation. This case highlights the importance of transparency in pricing and the potential risks of relying heavily on algorithms that may not account for ethical considerations in business practices.
Open Markets also argues that exchanging documents and/or pooling non-public information into a common data set in the algorithm is not a required element to show the existence of a conspiracy. What matters is whether competitors centralized their decision-making processes. This centralization of decision-making is a red flag for anti-competitive behavior and highlights the need for regulatory bodies to monitor industry practices closely.
“The evidence shows that Atlantic City casinos were not acting independently when they used Cendyn’s price-setting algorithm to raise hotel rates. If this were a competitive market, the casinos would have cut their hotel room prices to attract more guests when their competitors raised their rates to supercompetitive levels,” said Open Markets policy counsel Tara Pincock. “Instead, the casinos raised rates simultaneously while also reducing occupancy rates – behavior that only makes sense if the casinos were committed to a common, illegal scheme to fix prices.” This alarming trend indicates a broader issue within the hospitality sector that could have lasting effects on consumer trust and market stability.
Read the full brief here. Understanding the implications of these legal proceedings is crucial for both consumers and businesses. It is imperative to stay informed about the ongoing discussions regarding software pricing practices and their potential legal ramifications.
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