McDonald's Faces an AI Pricing Lawsuit: Could UAE Restaurants Face Similar Legal Risks?
How would a court view a case if a restaurant's pricing strategy was seen as coordinated even though it was done without any communication with its competitors?
McDonald's faced off with a lawsuit filed on October 2, 2026, that pointed a finger at its pricing assistance from AI as causing collusion among independently owned franchise restaurants through pricing that was the same.
The company denies the allegations, claiming that franchisees alone choose their prices and that the AI used by McDonald's does not contribute to price fixing in any manner whatsoever, as a matter of fact.
One cannot ignore that a legal question arising from the case has serious practical legal consequences for restaurateurs in the UAE and beyond.
That question is: can artificial intelligence function as a tool for fixing pricing?
Lets imagine the scenario taking place in DUBAI.
Three main competitors running in the dining scene would use the same AI-driven pricing platform if only the restaurants could access the program.
Each restaurant chain uploads confidential sales figures, the cost of a recipe, profit, and menu pricing to the cloud.
In the output from the machine learning the AI gives them back suggestions to price the products.
How would it be if this system is actually sharing secret pricing information between the two and causing the same price level?
The most astonishing part of this whole picture is the fact that none of the restaurants has ever talked to each other either, not on email. There are no phone calls and no meeting notes.
What would the legal position be in that case?
WHICH UAE RULES APPLY?
According to the wording of Article 5, the Law Federal No. 36 dated 36 March 2023 makes it illegal for parties to be in agreements where competition is hindered such as the fixing of prices either openly or secretly by the agreements or the terms of agreements.
Significantly, Ministerial Decision No. 96 of 2026 deals with the coordination of algorithms or automated systems, and as a result of that, it removes the price coordination exemption from the exceptional cooperation cases.
Therefore, restaurants aren't illegal for having pricing software tools powered by AI.
In the matter of AI, the main issue will not be that one company used it, but that they might have used it against each other in this way anticompetitive behavior was encouraged.
WHAT'S THE RESTAURANT OWNERSHIP'S POSITION?
Before committing to AI pricing vendor, I strongly advise to insert into the agreement four main contractual protections, I think:
- Protect Confidential Commercial Information.
Ban the vendor from the use of proprietary information such as unpublished prices, profit margins, or new pricing strategies to influence the competitive pricing decisions of other market participants.
- Segregate Competitor Data.
When preparing a contract or agreement it is crucial to address the confidential and proprietary nature of commercially sensitive information, specifically the information related to pricing proposals. It must be clearly written that commercially secret information from one company shall not be used by other companies in developing their price quotes or proposals.
- Keep the Right for Self-Pricing Decision.
Ensure that you can decide to change the pricing decision made by the system. Additionally, make sure it does not happen that your restaurant is priced together with competing restaurants automatically.
- Secure audit rights.
Negotiate for the opportunity to examine the systems data and the right to perform regular audits and have the agreement automatically terminate if the vendor's business practices give rise to concerns with regard to competition law.
I think it important to make the contractual safeguards clear. This set of contractual safeguards is not a statutory right conferred automatically.
THE MAJOR CONSEQUENCE?
In a restaurant business, investors normally focus on key commercial elements that include rent, franchise fees, royalties, and supplier contracts.
But are people truly evaluating whether their pricing software puts them at the risk of being found in breach of competition laws?
Technology can be very useful to increase profits; however, it must not be a covert means to price fixing among competitors.
The McDonald's case may not yet be closed, and the matter still seems tied to the US, it however, brings up important issues for UAE hotel chains, franchisees, and tech companies.
Is it permissible for an artificial intelligence system to decide your food prices when you also happen to be one of the AI company's clients besides serving its clients who are your direct rivals?
Need assistance with the revision of your restaurant franchise agreement, your agreement regarding AI technology, or other Food & Beverage commercial contracts?
Mohamed Darwish
Hospitality lawyer | Founder & Managing Partner
Darwish Legal Consultants
m.darwish@darwishadvocates.com
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