McDonald’s is confronting a federal lawsuit alleging that its AI-enhanced pricing tool breaches antitrust laws by sharing nonpublic data with franchisees who could be competing in the same market.

The lawsuit, filed Friday in Illinois, alleged that McDonald’s pricing tool employs artificial intelligence to amass data that rival franchises would not ordinarily disclose, such as store-level sales.

The Chicago-based burger conglomerate has maintained that it makes the tool accessible to U.S. franchisees in order to assist them in setting prices at their respective restaurants.

The lawsuit further attributes the escalation of McDonald’s U.S. prices to the pricing system.

“McDonald’s has built and for years deployed its own information-sharing pricing platform, which draws on data from its millions of daily transactions to set menu prices across thousands of U.S. restaurants,” the lawsuit states.

“The result is algorithmic price-fixing aimed at customers who are already stretched thin.”

McDonald’s said on Tuesday that the lawsuit is “filled with inaccuracies” and that it would vigorously defend itself.

“AI does not determine menu prices at McDonald’s restaurants – it is the franchisees who do so,” the company said in a statement.

“Optional tools are at the franchisees’ disposal to assist them in making the most judicious decisions for their businesses and customers, yet these tools neither automate, coordinate nor fix pricing in any manner.”

The lawsuit was filed on behalf of a consumer, Michael Thomas, of DeKalb, Illinois.

According to the lawsuit, Thomas is a regular patron of McDonald’s, where he habitually orders a Quarter Pounder with cheese, french fries and a Coke.

The lawsuit said Thomas noticed price discrepancies between McDonald’s stores near his home.

McDonald’s stated that it has employed an AI-enhanced pricing tool for over a decade.

The program ascertains the optimal price for menu items on the basis of a store’s sales, location and other factors, including competitors’ prices.

McDonald’s stated that well before it adopted the AI-enhanced tool, it had gathered data and recommended prices to its franchisees, who own and operate 95% of McDonald’s 14,000 U.S. stores.

“All we do is provide the context of what’s going on,” a McDonald’s spokesman said.

“We don’t have any way to affect the menu pricing in a restaurant.”

Nevertheless, the lawsuit asserted that McDonald’s wields “significant leverage over its franchisees” and is capable of pressuring them to comply with its pricing recommendations.

On Tuesday, reporters left a message with the National Owners Association, the organization representing McDonald’s franchisees.

For several years, McDonald’s has been trialling a range of value-oriented strategies across the U.S. and other markets as it endeavours to lure back lower-income consumers, whose patronage of fast-food chains has declined.

Nevertheless, franchisees do not invariably adhere to its directives.

During an investor conference call in August, McDonald’s Chairman and CEO Chris Kempczinski remarked that merely 60% of its U.S. restaurants were offering the proposed McDonald’s menu of 10 items priced under $3.

"As you are aware, within our system, that is not something we simply flip the switch on," Kempczinski said.

"It necessitates conversations with franchisees."

The lawsuit asks the judge to certify the case as a class action and to require McDonald’s to pay damages to the class.

It also seeks to prevent McDonald’s from enforcing agreements that restrict competition.