When Competitors Use the Same Pricing Algorithm: Where Independent Parallelism Ends and Concerted Practice Begins
Introduction : Now, businesses such as retailers, hotels, landlords, and airlines use advanced revenue-management systems. These include tools that analyse market information to suggest recommendations or automatically set the prices. When the same system is used by several market players, a question arises: Should one think about these businesses as having coordinated their actions/action?
The competition law allows firms to compare their prices with those of their competitors without condemnation; however, it condemns the coordination that replaces competition with collaboration. The existence of the same algorithm creates a dilemma since the same supplier can be involved in the operation of several rivals. The Competition Commission of India highlights the fact that the use of hub-and-spoke algorithms operating through the same provider has resulted in the same price levels across the market.
This blog considers the implications of concerted-practice doctrine, hub-and-spoke theory, and algorithmic recognition for traditional forms of pricing models used as per the Competition Act, 2002 and offers an overview of differences with EU and US experience.
Legal Provisions
Indian Competition Act, 2002 stipulates the prohibitions on agreements regarding Appreciable Adverse Effect on Competition (AAEC) in India under Section 3(1). In Section 3(3), AAEC is presumed in cases of agreements, practices or decisions among entities undertaking identical or similar trade which are involved in determining the sales prices directly or indirectly. In Section 2(b), ‘agreement’ comprises any arrangement, understanding or concerted action whatsoever, irrespective of whether it takes the form of an enforceable agreement.
The Competition (Amendment) Act, 2023 inserted an additional provision in Section 3(3) which states that an enterprise which does not engage in identical or similar trade is presumed to be a part of the agreement, if it engages or wants to engage in doing any act which leads to the agreement.
Legal Analysis
Independent Parallel Pricing Versus Concerted Practice
Simply matching prices is not illegal in itself. In simple and transparent markets, firms may simply manipulate their prices without getting in touch with one another. EU law allows firms to act rationally and inappropriately towards competing firms, which is fine as long as they do not engage in direct or indirect communications to create uncertainty about their pricing behaviour. Parallel behaviour can only raise suspicions of collusion if there are no other good explanations. The US law is similar: determination of conspiracy requires other corroborating evidence to confirm collusion. The Indian authorities, likewise, expect evidence of collusion other than parallel behaviour.
Common software as a coordinating device
An algorithm can do the same things as a cartel does: obtain confidential info from its rivals, calculate price, and communicate it. Four factors are crucial: whether the tool takes confidential rival data; whether inputs are collected from various users; whether users are compelled to follow recommendations; and whether users know that their rivals are using the very same tool.
A tool that uses data only from a licensee and public information and whose recommendations can be ignored looks like an ordinary consultant and involves independent pricing. On the contrary, a tool that collects confidential inputs but provides common outputs serves as the instrument of indirect communication that is prohibited according to the concerted practice doctrine.
Hub-and-spoke theory and algorithmic awareness
For a hub-and-spoke case to exist, a "rim" is required. This refers to a tacit or an explicit agreement among the spokes. In the case of Interstate Circuit, the use of a common proposal, known to have been received and accepted by a competitor in every aspect, is enough for the rim to exist. Eturas applied this logic to software: if users of a booking platform are aware of a message about a discount cap by its administrator, they can be presumed to have engaged in a collusive action unless they took measures to separate themselves from it. Today, the concept of algorithmic awareness applies here. If businesses know that their competitor is using the same tool and optimizing it with the help of data from their competitors, they have acted independently before the court – even if they have not protested against it in public.
However, it should be noted that awareness is still a subject of controversy. The Ninth Circuit has ruled that participating in the same tool knowingly and causing price hikes leads to no Sherman Act claim but seemed to suggest that the use of shared subscriber data or agreement to comply with the recommendations might have led to a different conclusion. As per the 2023 caveat, the vendor can be considered as a participant in the agreement only if a horizontal agreement under section 3(3) is present, and the presumption can be rebutted.
Case Laws
In the matter of Samir Agrawal v. Competition Commission of India, allegations were made against Ola and Uber for forming a hub-and-spoke cartel of drivers using the platform pricing algorithm. The Supreme Court supported the CCI ruling at the NCLAT and found that there was no prima facie violation due to the missing collusion, which is a key feature of hub-and-spoke practices since it involves competitors exchanging sensitive information by the means of an intermediary. The facts of the case involved a proprietary algorithm of a single platform, with no collusion to speak of between the two companies.
Eturas UAB v Lietuvos Respublikos konkurencijos taryba - A notification was sent by the advertiser by means of a collective booking discipline. The Court of Justice determined that any agency aware of the notification could be presumed to have adhered to a concerted practice unless it demonstrated otherwise, although the automatic sending of the message did not prove that it received it.
Gibson v Cendyn Group LLC and Duffy v Yardi Systems Inc. In the Gibson case, the Ninth Circuit upheld the decision to dismiss claims against the hotels in Las Vegas utilizing revenue management. The Ninth Circuit treated the usage of such revenue management software and the licenses as regular vendor agreements with no obligation to adhere to the vendor’s recommendations and without any pooling of competing data. However, the Duffy case portrays that a federal trial court in Washington did not dismiss a case in which it was alleged that landlords exchanged privileged information to demand increased rents through the common service provider. The conclusion explains why the crucial aspect of the first case is the absence of pooling of data in the second case.
Practical Implications
The concept of disclosure is about the design and governance of the systems rather than installing the software involved. The market analysis of CCI recommends the use of automated self-checks that demonstrate the rationale applied and information collected during the testing process. The compliance tool should be focused on the criteria mentioned below.
The indication of the indirect exchange of information is the integration of the data from one user into the suggestions for another user. The ruling in the RealPage case allows only data older than 12 months to be used for training the model. An automatic approval of recommendations, mass approval, or cumbersome vendor-monitoring processes in relation to the recommendations lead to the binding nature of the suggestions, which weakens the argument against collusion. Discount ceilings, minimum price, and prohibitions against undercutting implemented through the platform create a situation similar to the case of Eturas. If the programmers were guided by the goals of pricing discipline and avoiding price wars, rather than the principles of an effective pricing process that takes into account costs and demands of each company, the suspicion of collusion arises.
Steps to be taken are limiting the device to the licensee’s own and public data, consolidating and aging all data used from others, keeping log on the overridings done, making it a contractual obligation not to cross-use the confidential inputs, and making training available for the relevant pricing personnel.
Conclusion
Standard pricing software does not fall under the definition of either a package containing hard-core cartel activities or a safe harbour. The line differentiating the former from the latter lies between analytical and connective tools: while analysing prices can be justifiable parallel pricing, sharing secret information that is pooled and leads to similar outcomes comes to hard-core cartel behaviour. Indian law is now equipped with legislative phrasing in section 3(3), even though, according to the author’s knowledge, no case applying it to a shared pricing software has been registered yet. The CCI must put out directions explaining what does ‘participate or intended to participate’ mean for a software vendor, and also declare that the use of a tool based on the company’s own data, as well as on public information, should be considered as a rebuttable safe harbour.
Author: Aaliya Noorudheen in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney
References
Competition Commission of India, Market Study on Artificial Intelligence and Competition (October 2025).
Competition Act 2002 (India), ss 2(b), 3(1), 3(3).
Competition (Amendment) Act 2023 (India) (inserting a further provision to s 3(3) of the Competition Act 2002).
Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C326/47, art 101(1); Sherman Act 1890, 15 USC § 1.
Case C-8/08 T-Mobile Netherlands BV v Raad van bestuur van de Nederlandse Mededingingsautoriteit [2009] ECR I-4529.
Joined Cases C-89/85 and others Ahlström Osakeyhtiö v Commission (Wood Pulp II) [1993] ECR I-1307.
Bell Atlantic Corp v Twombly 550 US 544 (2007).
Samir Agrawal v ANI Technologies Pvt Ltd 2018 SCC OnLine CCI 86 (Case No 37 of 2018); Samir Agrawal v Competition Commission of India 2020 SCC OnLine NCLAT 811.
Interstate Circuit Inc v United States 306 US 208 (1939).
Case C-74/14 Eturas UAB v Lietuvos Respublikos konkurencijos taryba EU:C:2016:42.
Gibson v Cendyn Group LLC No 24-3576, 2025 WL 2371948 (9th Cir 15 August 2025).
Competition Act 2002 (India), s 3(3), second proviso (as amended in 2023).
Samir Agrawal v Competition Commission of India (2021) 3 SCC 136 (SC, 15 December 2020, Civil Appeal No 3100 of 2020).
Duffy v Yardi Systems Inc No 2:23-cv-01391 (WD Wash 4 December 2024).
Arnold & Porter, 'Algorithmic Pricing: Navigating Antitrust and Consumer Protection Risks' (Advisory, June 2026) (describing the final judgment in United States v RealPage Inc (MD NC, May 2026)).
CCI (n 1).
Arnold & Porter (n 15).
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