# Algorithmic Pricing and the Agreement Requirement: US and EU Law Compared **Both systems prohibit agreements, not similar prices. Section 1 of the Sherman Act reaches "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade", and Article 101(1) TFEU reaches "all agreements between undertakings, decisions by associations of undertakings and concerted practices". Neither reaches a firm that watches a rival and matches it. What differs is the link. US law asks for evidence tending to exclude independent action. EU law recognises the concerted practice, needing no commitment at all, and once a contact is shown it presumes the recipient took account of what it learned. A shared pricing vendor is the pressure point in both: in the US the claim usually turns on whether rivals' non-public data was pooled, in the EU on whether a firm knew of a common pricing rule and stayed silent.** ## The agreement requirement under Sherman Act section 1 15 U.S.C. section 1 provides that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal." The Supreme Court reads that as a requirement of concerted action and has refused to treat matching prices as a substitute for it. In Theatre Enterprises v. Paramount Film Distributing Corp., 346 U.S. 537 (1954), it held that "this Court has never held that proof of parallel business behavior conclusively establishes agreement or, phrased differently, that such behavior itself constitutes a Sherman Act offense", adding that "conscious parallelism" "has not yet read conspiracy out of the Sherman Act entirely." Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), applied that at the pleading stage: "A statement of parallel conduct, even conduct consciously undertaken, needs some setting suggesting the agreement necessary to make out a §1 claim; without that further circumstance pointing toward a meeting of the minds, an account of a defendant's commercial efforts stays in neutral territory." On the merits, Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 (1984), set the surviving standard: "there must be direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others had a conscious commitment to a common scheme designed to achieve an unlawful objective." An older route matters more than its age suggests. In Interstate Circuit v. United States, 306 U.S. 208 (1939), one actor sent an identical proposal to eight competitors, each knowing the others had received it. An express agreement among the recipients "was not a prerequisite to an unlawful conspiracy" because "It was enough that, knowing that concerted action was contemplated and invited, the distributors gave their adherence to the scheme and participated in it." A vendor that tells each customer what the others are doing sits where that letter sat. ## Agreements and concerted practices under Article 101 TFEU Article 101(1) TFEU prohibits, as incompatible with the internal market, "all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market", including those which "directly or indirectly fix purchase or selling prices or any other trading conditions". The third limb has no US equivalent. In T-Mobile Netherlands and Others, Case C-8/08, the Court of Justice described a concerted practice as "a form of coordination between undertakings by which, without it having been taken to the stage where an agreement properly so-called has been concluded, practical cooperation between them is knowingly substituted for the risks of competition". Nothing binding is needed. Contact is. The same judgment sets the boundary: independence "does not deprive economic operators of the right to adapt themselves intelligently to the existing or anticipated conduct of their competitors, it does, none the less, strictly preclude any direct or indirect contact between such operators" by which one may influence another's conduct or disclose its own intentions. EU law is no friendlier to inference from prices alone. In Wood Pulp II, 31 March 1993, Joined Cases C-89/85 and others, the Court held at paragraph 71 that "parallel conduct cannot be regarded as furnishing proof of concertation unless concertation constitutes the only plausible explanation for such conduct", and annulled the finding because quarterly price announcements could be explained as a rational response to market conditions. What the EU adds is evidential. Once a contact is shown, T-Mobile requires a national court, "subject to proof to the contrary, which it is for the undertakings concerned to adduce, to apply the presumption of a causal connection, according to which, where they remain active on that market, such undertakings are presumed to take account of the information exchanged with their competitors." A single occasion can be enough. That presumption is what an EU claimant gets and a US plaintiff does not. Decision path from parallel pricing to liability under Sherman Act section 1 and Article 101 TFEUParallel prices alone are lawful in both systems. If there is contact, an invitation, or pooling of rivals' non-public data, US law asks for evidence tending to exclude independent action while EU law finds a concerted practice and presumes the recipient acted on the information. Where a shared vendor is the hub, US claims turn on a horizontal rim between the competitors and EU claims turn on awareness of a common pricing rule without public distancing.Rival prices move togetherContact, invitation, or pooling of non-public rival data?noyesUS: lawful conscious parallelismTheatre Enterprises, 346 U.S. 537EU: no concertation unless it is theonly plausible explanation (Wood Pulp II, 71)US: agreement inferable if evidenceexcludes independent action (Monsanto)EU: concerted practice, recipientpresumed to act on it (T-Mobile, C-8/08)One vendor prices for several rivalsUS: needs a horizontal rim betweenthe spokes (Cornish-Adebiyi, 3d Cir.)EU: awareness of the rule and nopublic distancing (Eturas, C-74/14) ## Hub and spoke: what a shared vendor can and cannot supply The doctrinal shape is agreed even where outcomes differ. The Third Circuit stated it in Cornish-Adebiyi v. Caesars Entertainment Inc., No. 24-3006 (3d Cir., filed 29 July 2026): "Establishing a per se violation with the hub-and-spoke model requires showing that the spokes are connected to each other via a horizontal agreement." The vertical contracts with the vendor are not the violation. The rim is. Two appellate decisions on the same vendor's software came out opposite ways. In Gibson v. Cendyn Group, LLC, No. 24-3576 (9th Cir., filed 15 August 2025), the panel affirmed dismissal where competing hotels "independently purchased licenses for the same software, which software is alleged to have provided pricing recommendations, and which software did not share any licensing hotel's confidential information among the competing licensees." Plaintiffs "do not allege that Cendyn pools, shares, or uses the confidential information provided by a given Hotel Defendant into the pricing recommendations it generates for any other Hotel Defendant", and had abandoned that count. Cornish-Adebiyi had the allegation Gibson lacked. The Third Circuit reversed, pointing to pleadings that each hotel "understood" that "the recommended room rates they were receiving from [Cendyn's software] were based on real-time, non-public pricing and occupancy data [that] they and their co-defendants all were providing to the platform", and knew the others understood the same. Information exchanges among competitors "are not per se illegal", the court said, but are "a facilitating practice that can help support an inference of a price-fixing agreement". The agencies read the doctrine more expansively. In its Statement of Interest in In re RealPage, Inc., Rental Software Antitrust Litigation (No. II) (M.D. Tenn., 15 November 2023), the United States wrote that "Automating an anticompetitive scheme does not make it less anticompetitive", while conceding the limit: "Although not every use of an algorithm to set price qualifies as a per se violation of Section 1, taking the allegations set forth in the complaints as true, the alleged scheme meets the legal criteria for per se unlawful price fixing." On retained discretion, the United States told the court in Duffy v. Yardi Systems, Inc. (W.D. Wash., 1 March 2024): "It is per se illegal for competing landlords to jointly delegate key aspects of their pricing to a common algorithm, even if the landlords retain some authority to deviate from the algorithm's recommendations." These are litigation positions, not holdings. The closest EU authority is Eturas and Others, Case C-74/14, decided 21 January 2016. A booking platform administrator messaged travel agencies that discounts would be capped, and the system was then modified to enforce the cap. The Court held that an agency "may be presumed to have participated in that concertation if it was aware of the content of that message", rebuttable "by proving that it publically distanced itself from that practice or reported it to the administrative authorities". For firms that never saw the message, participation "cannot be inferred from the mere existence of a technical restriction implemented in the system at issue in the main proceedings". That is a lower threshold than any US authority: awareness plus silence, with no proof that any price changed. ## Information exchange: the EU rule is markedly stricter US law treats competitor information exchange as conduct to be assessed, not a violation in itself. United States v. Container Corp. of America, 393 U.S. 333 (1969), turned on that: "There was here an exchange of price information but no agreement to adhere to a price schedule". The European Commission's Guidelines on the applicability of Article 101 to horizontal co-operation agreements (2023/C 259/01) give exchange a chapter of its own, and that chapter names algorithms. Paragraph 368 states that information "may be exchanged directly between competitors (in the form of a unilateral disclosure or in a bi- or multilateral exchange), or indirectly, by or through a third party (such as a service provider, platform, online tool or algorithm)". Paragraph 379 meets the defence that the software did it: "firms involved in illegal pricing practices cannot avoid liability on the ground that their prices were determined by algorithms." Paragraphs 396 and 397 matter most in practice. "Unilateral disclosure can occur, for example, via (chat) messages, emails, phone calls, input in a shared algorithmic tool, meetings, etc." And a firm that receives commercially sensitive information from a competitor "will be presumed to take account of such information and to adapt its market conduct accordingly, unless it publicly distances itself" or reports it. Introducing "a pricing rule in a shared algorithmic tool", such as a rule to match the lowest price on a platform, is likewise likely to be caught by Article 101(1) with no explicit agreement. Under paragraph 414, "Exchanging information relating to undertakings' future conduct regarding prices or quantities" is singled out as particularly likely to produce a collusive outcome. ## US and EU positions compared | Dimension | United States | European Union | | --- | --- | --- | | Text of the prohibition | "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade" (15 U.S.C. 1) | "all agreements between undertakings, decisions by associations of undertakings and concerted practices" (Art. 101(1) TFEU) | | Is a lesser-than-agreement category recognised | No. Concerted action is the floor (Monsanto, 465 U.S. 752) | Yes. A concerted practice needs no concluded agreement (T-Mobile, C-8/08, para 26) | | Parallel pricing alone | Not a section 1 offence (Theatre Enterprises, 346 U.S. 537) | Not proof of concertation unless it is "the only plausible explanation" (Wood Pulp II, para 71) | | Effect of a single contact | No automatic inference; evidence must tend to exclude independent action (Monsanto) | Rebuttable presumption that the recipient took account of the information, even after one occasion (T-Mobile) | | Receiving information without acting | Circumstantial evidence, not a violation in itself (Container Corp., 393 U.S. 333) | Presumed taken into account unless the firm publicly distances itself or reports it (2023 Horizontal Guidelines, para 397) | | Information exchange as a standalone infringement | No freestanding prohibition | Yes, and by object where it removes uncertainty about future prices or quantities (Guidelines, paras 413 to 414) | | Shared vendor as the hub | Needs a horizontal rim between the spokes (Cornish-Adebiyi, 3d Cir. No. 24-3006); a common licence plus a price rise is not enough (Gibson, 9th Cir. No. 24-3576) | Awareness of a restriction introduced through the shared system plus failure to distance can suffice (Eturas, C-74/14, paras 44 to 46) | | "The algorithm decided" as a defence | Rejected in agency filings; per se treatment urged even where users may deviate (Yardi Statement of Interest) | Rejected in the Guidelines: liability is not avoided "on the ground that their prices were determined by algorithms" (para 379) | | Pleading threshold | Allegations must plausibly suggest agreement, not merely be consistent with it (Twombly, 550 U.S. 544) | National procedural rules apply, subject to effectiveness and the presumption of innocence (Eturas) | ## What enforcers and legislators have proposed Enforcement has outpaced legislation. On 24 November 2025 the Antitrust Division filed a proposed settlement with RealPage Inc. requiring it to "Cease having its software use competitors' nonpublic, competitively sensitive information to determine rental prices in runtime operation" and to limit model training to non-public data aged at least twelve months. The stated principle: "Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement." Federal legislation is pending, not enacted. S. 232, the Preventing Algorithmic Collusion Act of 2025, introduced on 23 January 2025, would make it "unlawful for a person to use or distribute any pricing algorithm that uses, incorporates, or was trained with nonpublic competitor data", and would create "a presumption for purposes of section 1 of the Sherman Act (15 U.S.C. 1) that the defendant entered into an agreement, contract, combination, or conspiracy in restraint of trade" where the bill's conditions are met. California has acted already. AB 325, chaptered on 6 October 2025, makes it unlawful "to use or distribute a common pricing algorithm if the person coerces another person to set or adopt a recommended price or commercial term recommended by the common pricing algorithm", defining that term as a methodology "used by two or more persons, that uses competitor data to recommend, align, stabilize, set, or otherwise influence a price or commercial term". It also changes the pleading rule: a Cartwright Act complaint "shall not be required to allege facts tending to exclude the possibility of independent action". The UK Competition and Markets Authority stated the gap plainly in Algorithms: How they can reduce competition and harm consumers: "It is as yet unclear that competition authorities can object to hub and spoke and autonomous tacit collusion situations where, for example, there may not have been direct contact between two undertakings or a meeting of minds between them to restrict competition." The same paper records that the European Commission's e-commerce sector inquiry found approximately 28 percent of respondents use software to track and adjust their own prices, and that one study estimated German petrol stations raised margins by around 9 percent after adopting algorithmic pricing, but only where they faced local competition. ## Where the law is genuinely unsettled The hardest case is the one no legislature has solved: rivals independently deploy self-learning pricing systems, no data passes between them, and prices converge above the competitive level. On the dominant reading that is conscious parallelism and neither system reaches it, because there is no contact to characterise as concertation and nothing tending to exclude independent action. The competing reading, which the CMA describes without endorsing, is that delegating pricing to a system built to read and answer rivals is itself the substitution of cooperation for the risks of competition that T-Mobile defines. No court has adopted that reading on facts free of data sharing. How much sharing is enough is also open. Gibson and Cornish-Adebiyi can be reconciled on the pooling of non-public data, or as a real disagreement about what the vendor's presence does alone; the Supreme Court denied certiorari in Gibson in April 2026 without resolving it. So is retained discretion: the United States says authority to deviate does not matter, and the Ninth Circuit treated retained pricing authority as significant. One point cuts against anyone selling detection. A statistical finding that prices carry the signature of coordination does not establish an agreement under either system. It is evidence about market outcomes, and Wood Pulp II is the standing demonstration that an outcome consistent with concertation can have another plausible explanation that defeats the inference. Detection tells you where to look, not what you will find. This page sets out what the cited instruments and judgments say. It is information, not legal advice. Matters described as alleged are allegations in the filings named, and nothing here states that any company broke the law. ## Frequently asked questions **Is conscious parallelism illegal?** Not on its own in either system. Theatre Enterprises held that parallel business behaviour does not conclusively establish agreement and is not itself a Sherman Act offence. Wood Pulp II held that parallel conduct proves concertation only where concertation is the only plausible explanation. **Is algorithmic pricing legal?** Using a pricing algorithm is not itself unlawful in either system; the prohibition attaches to the agreement or concerted practice. The Department of Justice has told courts that "not every use of an algorithm to set price qualifies as a per se violation of Section 1", and the 2023 Horizontal Guidelines say firms "cannot avoid liability on the ground that their prices were determined by algorithms". **What is a concerted practice in competition law?** In T-Mobile Netherlands, Case C-8/08, the Court of Justice defined it as "a form of coordination between undertakings by which, without it having been taken to the stage where an agreement properly so-called has been concluded, practical cooperation between them is knowingly substituted for the risks of competition". It has no direct counterpart in US law. **What is a hub and spoke conspiracy in antitrust?** A structure in which competitors, the spokes, each deal with a common party, the hub. The Third Circuit stated in Cornish-Adebiyi that a per se violation on this model "requires showing that the spokes are connected to each other via a horizontal agreement", the rim of the wheel. **What would the Preventing Algorithmic Collusion Act of 2025 change?** S. 232 would prohibit using or distributing a pricing algorithm trained with or using non-public competitor data, create a presumption of agreement under Sherman Act section 1 in defined circumstances, and require written reports on pricing algorithms to enforcers on request. It has not been enacted. ## Sources 1. 15 U.S. Code § 1 - Trusts, etc., in restraint of trade illegal; penalty, Legal Information Institute. https://www.law.cornell.edu/uscode/text/15/1 2. THEATRE ENTERPRISES, Inc. v. PARAMOUNT FILM DISTRIBUTING CORP. et al., 346 U.S. 537 (1954). https://www.law.cornell.edu/supremecourt/text/346/537 3. BELL ATLANTIC CORP. v. TWOMBLY, 550 U.S. 544 (2007), opinion of the Court. https://www.law.cornell.edu/supct/html/05-1126.ZO.html 4. MONSANTO COMPANY, Petitioner v. SPRAY-RITE SERVICE CORPORATION, 465 U.S. 752 (1984). https://www.law.cornell.edu/supremecourt/text/465/752 5. INTERSTATE CIRCUIT, Inc., et al. v. UNITED STATES, 306 U.S. 208 (1939). https://www.law.cornell.edu/supremecourt/text/306/208 6. UNITED STATES, Appellant, v. CONTAINER CORPORATION OF AMERICA et al., 393 U.S. 333 (1969). https://www.law.cornell.edu/supremecourt/text/393/333 7. Consolidated version of the Treaty on the Functioning of the European Union, Article 101 (ex Article 81 TEC), OJ C 326, 26.10.2012. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12012E101 8. Case C-8/08, T-Mobile Netherlands BV and Others v Raad van bestuur van de Nederlandse Mededingingsautoriteit. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62008CJ0008 9. Judgment of the Court (Fifth Chamber) of 31 March 1993, A. Ahlström Osakeyhtiö and others v Commission of the European Communities, Joined cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 (Wood Pulp II). https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:61985CJ0089(01) 10. JUDGMENT OF THE COURT (Fifth Chamber) 21 January 2016, Case C-74/14, Eturas and Others. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62014CJ0074 11. COMMUNICATION FROM THE COMMISSION, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements (2023/C 259/01). https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52023XC0721(01) 12. STATEMENT OF INTEREST OF THE UNITED STATES, In re RealPage, Inc., Rental Software Antitrust Litigation (No. II), No. 3:23-md-3071 (M.D. Tenn. 15 November 2023). https://www.justice.gov/d9/2023-11/418053.pdf 13. STATEMENT OF INTEREST OF THE UNITED STATES OF AMERICA, Duffy v. Yardi Systems, Inc., No. 2:23-cv-01391-RSL (W.D. Wash. 1 March 2024), with the RealPage memorandum of law attached. https://www.ftc.gov/system/files/ftc_gov/pdf/YardiSOI-filed%28withattachments%29_0.pdf 14. FTC and DOJ File Statement of Interest in Hotel Room Algorithmic Price-Fixing Case, Federal Trade Commission, 28 March 2024. https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-doj-file-statement-interest-hotel-room-algorithmic-price-fixing-case 15. Justice Department Requires RealPage to End the Sharing of Competitively Sensitive Information and Alignment of Pricing Among Competitors, Office of Public Affairs, 24 November 2025. https://www.justice.gov/opa/pr/justice-department-requires-realpage-end-sharing-competitively-sensitive-information-and 16. GIBSON V. CENDYN GROUP, LLC, No. 24-3576 (9th Cir. 15 August 2025). https://cdn.ca9.uscourts.gov/datastore/opinions/2025/08/15/24-3576.pdf 17. KAREN CORNISH-ADEBIYI v. CAESARS ENTERTAINMENT, INC., No. 24-3006 (3d Cir., precedential opinion filed 29 July 2026). https://www2.ca3.uscourts.gov/opinarch/243006p.pdf 18. Algorithms: How they can reduce competition and harm consumers, Competition and Markets Authority. https://www.gov.uk/government/publications/algorithms-how-they-can-reduce-competition-and-harm-consumers/algorithms-how-they-can-reduce-competition-and-harm-consumers 19. S. 232, Preventing Algorithmic Collusion Act of 2025, 119th Congress, introduced in Senate 23 January 2025. https://www.govinfo.gov/content/pkg/BILLS-119s232is/html/BILLS-119s232is.htm 20. Bill Text - AB-325 Cartwright Act: violations, California Legislative Information, chaptered 6 October 2025. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260AB325