Fara Tabatabai Discusses Antitrust Risks of Algorithmic Pricing in Franchise Models with Bloomberg Law
Proposed class action against McDonald’s tests the application of algorithmic pricing theories of collusion in franchises.
Highlights
A proposed class action accuses McDonald’s of pressuring franchisees to use an algorithmic pricing tool, allegedly resulting in higher menu prices.
Tabatabai says the application of an algorithmic pricing theory of collusion in a franchise context is new.
Tabatabai discusses how McDonald’s alleged control over its franchisees could factor into the case.
Fara Tabatabai discussed the antitrust risks surrounding the use of algorithmic pricing tools in franchise models with Bloomberg Law.
The article examines a proposed class action accusing McDonald’s of pressuring its franchise restaurants to use an algorithmic pricing tool, allegedly resulting in higher menu prices. The case differs from previous algorithmic price-fixing litigation in part because it alleges that McDonald’s used a system-wide pricing tool to coordinate prices among its franchisees.
“We haven’t seen this algorithmic pricing theory of collusion applied in a franchise context before,” Tabatabai said.
She also discussed the extent of McDonald’s alleged control over its franchisees, including allegations that franchisees could face consequences for not following pricing recommendations.
The suit alleges that, “effectively McDonald’s has control over its franchisees because it can punish them in these other ways,” Tabatabai said.
Featured Lawyers
Related Capabilities
Stay Up to Date
Sign up to receive practical updates, fresh perspectives and helpful guidance delivered straight to your inbox.
Stay connected for our latest news and insights.