Key takeaways
- The Ninth Circuit affirmed the dismissal of price-fixing claims against several Las Vegas hotel operators and an algorithmic pricing software provider, ruling that the alleged series of individual agreements between Cendyn and each hotel defendant did not unreasonably restrain trade for hotel room rentals in Las Vegas.
- The Court emphasized that Section 1 of the Sherman Act requires a demonstrable link between an agreement and an unreasonable restraint of trade with anticompetitive effect; mere unilateral adoption of similar pricing tools by competitors is insufficient to establish an antitrust violation.
- The Ninth Circuit’s view of algorithmic collusion diverges from the DOJ’s more robust stance, signaling potential for future circuit splits on how courts interpret parallel use of pricing algorithms.
In depth
On August 15, 2025, the U.S. Court of Appeals for the Ninth Circuit issued an opinion in Gibson et al. v. Cendyn Group, Inc., addressing the limits of antitrust liability based upon the use of algorithmic pricing tools. The plaintiffs alleged that several major Las Vegas hotels engaged in unlawful price-fixing by licensing and using the same revenue management software developed by Cendyn. On appeal, Plaintiffs waived one count of their claim alleging the existence of a coordinated hub-and-spoke agreement among the hotels to either adopt Cendyn's revenue management software or be bound by its pricing recommendations. Instead, Plaintiffs argued that the individual licensing agreements between each hotel and Cendyn, taken together, restrained competition and led to increased hotel room rates on the Las Vegas Strip.
The Ninth Circuit affirmed the district court’s dismissal, holding that the plaintiffs failed to plausibly allege a violation of Section 1 of the Sherman Act. The panel emphasized that Section 1 requires a causal connection between a challenged agreement and an actual restraint of trade. Separate competitors each making unilateral decisions to use the same software cannot sustain a Section 1 violation without alleging more. In this case, the licensing agreements were non-binding and did not require the hotels to follow the software’s pricing recommendations. Nor did they restrict hotels from using alternative pricing tools or dictate specific pricing strategies. The Court found that the agreements preserved each hotel’s autonomy in setting room rates and did not impair competitive incentives.
Importantly, the Court distinguished between parallel conduct and concerted action, noting that while competitors may independently adopt similar technologies, such behavior does not amount to a conspiracy. Even consciously parallel conduct—where competitors knowingly engage in similar behavior—is not, by itself, a Sherman Act violation. The court clarified that access to the same algorithmic pricing tools or market data does not inherently reduce a firm’s incentive to compete on price or quality.
Further, the court held that Cendyn was not imposing a vertical restraint on the Las Vegas hotels. While Cendyn operates in the same industry, it is not operating in the same competitive market because its pricing algorithm is not “up the supply chain” and does not “contribute the raw materials, capital, or labor” required to offer hotel-room rentals.2 Instead, the Court analogized the pricing software to a tax adviser providing “back-office” functions.3 Going even further, the Court held that the licensing agreements were only “ordinary sales contracts” that “do not restrain trade.”4
The Ninth Circuit also rejected Plaintiffs’ attempt to characterize the licensing agreements as a collective restraint on trade. Plaintiffs argued that the agreements, taken together, had an anticompetitive effect by leading to higher prices. However, the Ninth Circuit found this theory unsupported by factual allegations of a discrete anticompetitive impact from individual decisions or bilateral agreements. It emphasized that antitrust law does not permit aggregation of independent, non-horizontal agreements absent evidence of coordinated conduct or market foreclosure. The Court clarified that higher prices alone do not establish a violation of Section 1, as price increases may reflect lawful competitive behavior. Without allegations showing that the licensing agreements were coordinated and restricted competitive incentives or impaired market dynamics, the Court concluded that Plaintiffs failed to plead a cognizable Section 1 claim.
The Department of Justice has advocated for a more robust interpretation of Section 1 liability than the Ninth Circuit articulated in Gibson—including in an amicus brief submitted to the Ninth Circuit supporting plaintiffs,5 as well as in Statements of Interest filed in the Gibson case, in In re MultiPlan Health Insurance Provider Litigation, and a number of other cases alleging collusion based upon use of a common algorithmic pricing tool.
In those statements, DOJ has urged judges to consider how shared pricing mechanisms—particularly centralized algorithms—can facilitate collusion. The DOJ argued in its amicus brief that the concerted action required to establish a Section 1 violation is present where a common algorithm invites direct competitors to use its service and those competitors then accept that invitation. DOJ’s view of applicable case precedent is that “an algorithm provider’s ‘pitch’ could constitute an invitation for collective action among competitors—for example, by indicating to users that the same pitch was made to their competitors and that using the algorithm could help them avoid competition—and subsequent joint use of the algorithm could demonstrate acceptance of that invitation.”6 Further, DOJ explained that a pricing algorithm’s suggestion of common starting point prices can be concerted action if multiple competitors started at those prices, even if they end up charging different final prices.7 DOJ has further signaled a robust enforcement agenda. Assistant Attorney General Gail Slater has warned that “[a]s [pricing algorithm] systems become more prevalent across our economy, we anticipate that the number of investigations involving these shared algorithms will grow.”8
Conclusion
The Ninth Circuit held that individual and bilateral agreements to employ the same algorithmic pricing software—even when separately adopted by direct competitors—are insufficient to establish a Section 1 violation. Businesses remain free to adopt technological solutions to optimize pricing, provided they do not engage in collusive behavior or otherwise enter into agreements with their rivals that restrain competition.
Despite the outcome, competing companies using the same pricing algorithm remains a risky proposition. Companies should continue to expect antitrust scrutiny and allegations of unlawful behavior, including potential criminal or civil litigation. DOJ continues to investigate this conduct and a number of civil disputes continue to be litigated. The applicable law remains far from settled. Firms should exercise caution when adopting these services and consult counsel to provide training and ensure that their use of these tools is supported by robust compliance protocols.
1 Gibson, et al. v. Cendyn Group, LLC, et al., No. 24-3576 (9th Cir. Aug. 15, 2025), ECF No. 77.
2 Gibson, No. 24-3576 at 16.
3 Id.
4 Id. at 17.
5 Brief for the United States as Amicus Curiae in Support of Plaintiffs-Appellants, Case No. 24-3576 (9th Cir. Oct. 24, 2024). https://www.justice.gov/atr/media/1376121/dl (“DOJ Amicus Brief”).
6 DOJ Amicus Brief § I.A. Unlike in Gibson, where hotels retained discretion over pricing and software use, the health insurers in MultiPlan were contractually obligated not to reduce MultiPlan-calculated rates. The District of Nevada found that these terms functioned more like mandates rather than customizable features. MultiPlan also played a more active role in facilitating coordination among payors, sharing enough pricing information to allow insurers to infer how competitors were calculating out-of-network reimbursement rates. These structural and behavioral features led the court to deny the defendants’ motion to dismiss.
7 DOJ Amicus Brief § I.B.
8 https://x.com/AAGSlater/status/1954910329734881786.
