Algorithmic Pricing & Section 1

Shared Pricing Algorithms as Section 1 Concerted Action

Courts confronting algorithmic price-fixing claims have converged on a single organizing question: did the competitors pool non-public, competitively sensitive data through the algorithm, or did they merely adopt the same software independently? The District of Nevada framed the test in the first of these cases to be decided: "a successful hub and spoke theory of Sherman Act liability based on the use of algorithmic pricing depends in part on the exchange of nonpublic information between competitors through the algorithm." Gibson v. CENDYN Group, LLC, No. 2:23-cv-00140 (D. Nev. Oct 24, 2023). Public inputs sit on the lawful side of that line — "[c]onsulting public sources to determine how to price a hotel room by viewing your competitor's rates does not violate the Sherman Act."

On the concerted-action side stands the RealPage multidistrict litigation. Sustaining the multifamily renters' hub-and-spoke theory, the court found the "most persuasive evidence of horizontal agreement" to be "the simple undisputed fact that each RMS Client Defendant provided RealPage its proprietary commercial data, knowing that RealPage would require the same from its horizontal competitors and use all of that data to recommend rental prices to its competitors." IN RE: Realpage, Inc., Rental Software Antitrust Litigation (No. II), 709 F.Supp.3d 478 (M.D. Tenn. 2023). The reciprocity did the analytical work: contributing sensitive pricing and supply data "is in Defendants' economic self-interest if and only if Defendants know they are receiving in return the benefit of their competitors' data in pricing their own units." The court nonetheless declined per se treatment, concluding that the scheme "is not the straightforward form of horizontal price-fixing conspiracy for which courts apply the per se standard," and sent the claim forward under the rule of reason.

Duffy v. Yardi Systems pressed further on both fronts. Invoking the principle that "[a]cceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out, is restraint of interstate commerce, is sufficient to establish an unlawful conspiracy under the Sherman Act," the court held that lessors who each routed commercially sensitive data to a common intermediary, knowing competitors were doing likewise, had plausibly agreed. Duffy v. Yardi Systems Inc, No. 2:23-cv-01391 (W.D. Wash. Dec 4, 2024). And unlike the RealPage court, it saw no novelty obstacle in the algorithmic mechanism: "[w]hen a conspiracy consists of a horizontal price-fixing agreement, no further testing or study is needed," and "[p]lausible allegations that defendants colluded to fix prices at above-market rates and impose those prices on customers is per se anticompetitive conduct."

The other side of the line is now circuit law. Gibson, et al. v. Cendyn Group, Llc, et al., No. 24-3576 (9th Cir. Aug 15, 2025) affirmed dismissal where competing Las Vegas hotels each licensed the same non-binding price-recommendation software, rejecting the plaintiffs' proposed rule that several competitors' choice of the same provider, followed by higher prices, suffices to trigger rule-of-reason scrutiny. Absent a horizontal conspiracy, the individual licenses cannot be evaluated "in the aggregate"; even consciously parallel conduct — conduct resulting from "observation of [one's] competitors' decisions" and "the pressures of an interdependent market" — does not violate Section 1, and antitrust law "does not require a business to turn a blind eye to information simply because its competitors are also aware of that same information." CORNISH-ADEBIYI v. CAESARS ENTERTAINMENT, INC., No. 1:23-cv-02536 (D.N.J. Sep 30, 2024) reached the same result for Atlantic City casino-hotels, declining to "infer a plausible price-fixing agreement between the Casino-Hotels from the mere fact that they all use the same pricing software" where adoption was staggered over fourteen years and each hotel retained and exercised its own pricing authority.

The dividing line is therefore about the data, not the software. Common adoption of the same pricing tool — even one known to push prices upward — remains unilateral conduct so long as each firm feeds the algorithm its own or public information and stays free to reject the output. Concerted action begins where competitors surrender non-public pricing and supply data to a common engine knowing that rivals are doing the same, because at that point each firm's participation makes economic sense only as one half of a reciprocal exchange. Complaints that document the confidential data feeds and the recommendations built on rivals' inputs have survived dismissal; complaints showing only parallel purchases of the same software have not.