When AI sets the price: The Third Circuit's wake-up call on algorithmic collusion

Here's something that should be on every tech-forward company's radar: the Third Circuit just breathed new life into a price-fixing lawsuit targeting AI-powered pricing software. 

What happened?

In Cornish-Adebiyi v. Caesars Entertainment, Inc., a group of plaintiffs sued several Atlantic City casino hotels and Cendyn, the company behind the Rainmaker revenue-management platform. The theory? Those competing hotels fed their real-time, non-public pricing and occupancy data into a shared AI system, which then spit out rate recommendations multiple times daily. The hotels allegedly followed those AI-generated recommendations about 90% of the time. Plaintiffs called it a hub-and-spoke conspiracy, with the algorithm functioning as the hub.

The district court tossed the case in 2024, but on July 29, 2026, the Third Circuit reversed and let the claims move forward.

Why the Court wasn't buying the "It's just software" defense

The appellate panel zeroed in on a few things that made this more than a garden-variety "we all use the same tool" situation. First, the AI system wasn't just processing each hotel's data in isolation—it allegedly pooled confidential competitor information and used it to generate coordinated pricing outputs. That's a fundamentally different animal than independent analytics.

Second, the court wasn't impressed by the argument that hotels retained final pricing authority. When you're accepting AI recommendations nine times out of ten, and your staff needs special override permissions to deviate, that "independent judgment" defense starts looking pretty thin.

Third, the court noted that even though the hotels adopted the tool over a 14-year span, an adaptive AI pricing system creates the "opportune time and capability for collusion" from the moment it is in place. Staggered adoption doesn't get you off the hook if you're all running the same algorithm simultaneously.

The AI angle that should concern everyone

Let's zoom out. This isn't really just about hotel rooms in Atlantic City. It's about the collision between increasingly sophisticated AI pricing tools and antitrust law that was written for a pre-AI world.

AI systems can now facilitate coordination without anyone picking up the phone. The algorithm becomes the intermediary, and regulators are clearly paying attention. The Third Circuit explicitly noted that using AI or third-party software "does not eliminate antitrust risk." That's a signal.

For those of us in the data privacy and cybersecurity world, there's a related thread here too. These AI pricing platforms depend on the flow of competitively sensitive data between rivals through a shared vendor. That raises questions not just about antitrust, but about data governance, information barriers, and whether your contracts with AI vendors adequately address how competitor data gets used in model training and output generation.

What this means practically

The court was careful to say this is just a pleading-stage ruling—nobody's been found liable. It also explicitly acknowledged that using a common software tool, independently, to compete isn't unlawful. The problem arises when an AI system functions as a de facto shared pricing agent that ingests competitors' confidential data and produces recommendations everyone follows.

If you use AI-driven pricing, revenue management, or analytics tools, now's the time to audit those systems. Understand the data flows. Make sure there's genuine independent pricing judgment being exercised and documented. And don't assume that because an algorithm made the recommendation, the antitrust laws don't apply.

The machines might be setting the prices, but the liability still lands on the humans.