Third Circuit Revives Algorithmic Pricing Antitrust Case

Scrutiny of algorithms using competitor data deepens.  

By Dan Mogin

A federal appeals court has given antitrust plaintiffs one of their clearest openings yet to challenge algorithmic pricing systems that allegedly rely on competitors’ non-public data. The ruling did not declare pricing software unlawful, but does signal that when competing businesses feed sensitive information into a shared platform and then use recommendations generated from that pooled data, courts may treat the arrangement as more than ordinary software-assisted pricing. 

On July 29, 2026, the U.S. Court of Appeals for the Third Circuit revived a proposed antitrust class action alleging that several Atlantic City casino-hotels used Cendyn Group’s Rainmaker revenue-management software to coordinate room rates in violation of Section 1 of the Sherman Act. In Cornish-Adebiyi v. Caesars Entertainment, Inc., the court held that plaintiffs plausibly alleged a horizontal hub-and-spoke conspiracy among competing casino-hotels. 

The opinion provides a pleading roadmap for algorithmic price-fixing claims where plaintiffs can allege more than parallel adoption of the same pricing tool: shared non-public data, awareness that competitors are using the same system, high adherence to recommendations, and market facts suggesting reduced independent pricing behavior. 

The court did not decide whether the defendants violated the antitrust laws; it held only that the allegations, if true, were sufficient to move the case into discovery. The point is conduct, not technology: the question is whether a pricing tool helps firms compete more effectively or helps competitors coordinate behavior that market forces would otherwise constrain. 

What the Plaintiffs Alleged  

According to the complaint, Atlantic City casino-hotels provided current, non-public pricing and occupancy information to Cendyn’s Rainmaker platform. The software allegedly combined that information with data from competing hotels and used those inputs to generate pricing recommendations that participating hotels followed approximately 90 percent of the time.   

Plaintiffs alleged that the system functioned as a hub-and-spoke conspiracy. Under that theory, the software provider acted as the “hub,” while competing hotels served as the “spokes.” The central question was whether the complaint plausibly alleged a “rim” connecting the competing hotels through a common agreement.   

The district court dismissed the case, concluding the complaint failed to adequately allege that agreement. The Third Circuit disagreed and reversed.   

Why the Third Circuit Found the Allegations Plausible  

The court emphasized that plaintiffs alleged far more than parallel use of the same software.  

According to the opinion, the complaint alleged that competing hotels knowingly supplied non-public pricing and occupancy information into a common system, understood that competitors were doing the same, and accepted pricing recommendations generated using those combined data inputs. Plaintiffs also alleged that participating hotels followed the software’s recommendations approximately 90 percent of the time and faced practical obstacles to overriding those recommendations.   

The court further pointed to allegations that room rates increased while occupancy rates declined, despite the traditional economic incentives of casino-hotels. Because casino operators often earn substantial revenue from gaming, restaurants, and entertainment once guests arrive, the court found it noteworthy that hotels allegedly maintained elevated room prices rather than cutting rates to attract additional visitors.   

Taken together, those allegations were sufficient to support a plausible inference of collusion at the pleading stage.   

Key Passage in the Opinion: What about Bob?  

The opinion’s most quoted passage is likely to be Judge McKee’s discussion of a hypothetical pricing coordinator:  

“If Cendyn’s algorithm is in effect collecting non-public commercial information from defendants and utilizing the collective pot of data to ‘suggest’ prices to each, under the circumstances alleged here, plaintiffs have surely raised a plausible inference of collusion under Section 1 of the Sherman Act even though the alleged hub is named ‘Rainmaker’ rather than ‘Bob.'”   

That language builds on comments previously made by former FTC Acting Chair Maureen Ohlhausen, who questioned whether conduct that would be unlawful if performed by a person should become legal simply because it is performed by software.   

For companies using pricing algorithms, the court’s focus appears less concerned with artificial intelligence itself and more concerned with whether competitors are exchanging commercially sensitive information through a common intermediary.  

An Important Line Drawn

The Third Circuit repeatedly acknowledged that pricing software can serve legitimate business purposes.  

The opinion explains that there is “nothing inherently wrong” with using algorithms to improve business performance or respond to market conditions more efficiently.  

The court stressed that this case involved specific allegations that competitors shared non-public information through a centralized platform and then relied on recommendations generated from those pooled data. That alleged conduct, not the mere existence of pricing software, drove the court’s analysis.   

Contrast to Ninth Circuit’s Algorithmic Pricing Opinion 

The decision arrives less than a year after the Ninth Circuit affirmed dismissal in Gibson v. Cendyn Group, LLC, another algorithmic-pricing case involving Las Vegas hotel rooms and Cendyn revenue-management software. But the cases reached the appellate courts in materially different postures.  

In Cornish-Adebiyi, the Third Circuit addressed whether plaintiffs plausibly alleged a horizontal hub-and-spoke conspiracy among competing casino-hotels.  

In Gibson, by contrast, the plaintiffs abandoned their appeal of the dismissed hub-and-spoke claim, leaving the Ninth Circuit to consider only whether the hotels’ separate licensing agreements with Cendyn — which the court treated as neither horizontal nor vertical restraints in the relevant hotel-room market — stated a Section 1 claim.  

The data allegations also differed in an important way. Gibson did allege that each hotel supplied Cendyn with non-public pricing and occupancy data. But the Ninth Circuit emphasized that plaintiffs did not allege Cendyn pooled, shared, or used one hotel’s confidential information to generate pricing recommendations for competing hotels. In Cornish-Adebiyi, by contrast, the Third Circuit treated the alleged use of competitors’ shared non-public data as central to the plausibility of the horizontal coordination theory. 

As a result, the Third Circuit’s decision is likely to become a focal point in ongoing debates about how antitrust law should apply to algorithmic pricing systems and AI-driven decision making.   

Who May Be Impacted  

Businesses that use shared pricing, revenue-management, or optimization platforms should pay close attention to the court’s reasoning. The decision is particularly relevant for hotels, landlords, airlines, retailers, logistics providers, and any industry where competitors may rely on common software vendors to assist with pricing decisions.  

It may also be important to consumers, suppliers, and businesses that believe coordinated pricing practices have resulted in artificially higher prices, reduced output, or diminished competition.  

While the ultimate outcome of the case remains uncertain, the opinion provides a roadmap for future challenges to algorithmic pricing systems that allegedly rely on competitors’ non-public information.   

This decision may be particularly important for:  

• Any business using or considering using AI-driven tools that incorporate market-wide information.  

• Software developers that aggregate customer pricing information.  

• Hotels, property managers, airlines, retailers, and other industries that rely on dynamic pricing systems.  

• Consumers and agencies investigating potential algorithmic price-fixing claims.  

Commentary: Good Fit with Section 1 

The allegations in Cornish-Adebiyi involve more than the use of a common software platform. They involve allegations that competitors supplied non-public commercial information to a shared intermediary and then relied on recommendations generated from that collective data. That is why the court’s analysis fits comfortably within long-standing Section 1 principles: price-fixing through a third-party intermediary is still price-fixing if the facts support an inference that competitors knowingly adhered to a common scheme.  

That point matters because direct communications among competitors are not always necessary to plead an agreement under Section 1. Courts have long recognized that an agreement may be inferred from many factors including the structure of an arrangement, an invitation to participate in coordinated conduct, and conduct showing acceptance of that invitation. In the algorithmic pricing context, the alleged common platform can play the role of a cartel manager if it collects competitors’ sensitive data, uses that pooled information to produce pricing recommendations, and thereby reduces the need for each firm to make independent pricing decisions.  

Nor should the non-binding nature of an algorithmic recommendation necessarily end the inquiry. Section 1 condemns concerted action that raises, depresses, fixes, pegs, or stabilizes prices. If competitors agree to use a common pricing mechanism that influences an important component of price-setting, the fact that each participant retains some ability to deviate does not by itself eliminate antitrust concern. The agreement, not the final price selected in any individual transaction, is the focus of the law.  

The decision also reflects the enforcement agencies’ continued concern that common algorithmic pricing tools can become a modern mechanism for traditional coordination. Earlier government statements of interest in algorithmic pricing cases involving real estate rental software and other shared pricing systems made the same basic point: the law does not become less concerned with collusion simply because the coordinating mechanism is software rather than a person.  

Whether the allegations in Cornish-Adebiyi are ultimately proven remains to be seen. But the decision suggests that courts will carefully examine pricing systems that potentially reduce independent decision-making while creating opportunities for coordinated conduct, especially where competitors allegedly contribute non-public data to a shared system and then follow the resulting recommendations at a high rate.  

Edited by Tom Hagy, Editor-in-Chief, Mogin Law Blog.