Richard Gibson, et al. v. Cendyn Group, LLC, et al.

Section 1 of the Sherman Act prohibits “[e]very contract, combination . . . or conspiracy, in restraint of trade.” 15 U.S.C. § 1. This Court has long held that “[e]very agreement concerning trade . . . restrains” to some degree, and that the operative question is therefore whether a restraint is unreasonable. Bd. of Trade v. United States, 246 U.S. 231, 238 (1918); Nat’l Soc. of Pro. Eng’rs v. United States, 435 U.S. 679, 688 (1978). Petitioners alleged that competing casino-hotels on the Las Vegas Strip each entered licensing agreements with a common vendor for algorithmic pricing software that generates room-price “recommendations,” automatically uploads those prices into hotels’ systems, and restricts deviations through “override permissions.” App.5a–6a. Petitioners alleged that these contracts unreasonably restrained trade by replacing the hotels’ independent pricing decisions with a shared algorithmic default— resulting in supracompetitive prices. App.4a–5a. The courts below refused to apply the rule of reason, holding that the licensing agreements “do not restrain trade in the relevant market” because the software does not expressly require hotels to implement its pricing recommendations. App.16a, 54a–55a. The question presented is: Whether vertical licensing agreements between a common algorithmic pricing vendor and competing firms are categorically exempt from Section 1’s rule-of-reason inquiry because the agreements do not expressly compel adherence to the software’s pricing recommendations.