Washington D.C.—U.S. Senator Ron Wyden today joined Senate colleagues to introduce legislation that would prevent companies from using algorithms to collude to set higher prices. This legislation builds off legislation Wyden introduced last year to crack down on companies that help landlords increase rents in already high-priced markets.
“Collusion is collusion, whether you do it over the phone or using an algorithm. This legislation, along with my End Rent Fixing Act, will send a strong message to corporations that they won’t get away with coordinating to ratchet up prices on consumers,” said Wyden.
As recent reporting, a Justice Department lawsuit, and multiple private lawsuits have shown, big corporations are using algorithms to raise prices and limit competition. This includes companies like RealPage that have facilitated collusion to increase rents by more than $3 billion in 2023 alone. This legislation would make such collusion illegal to lower costs for families and support small businesses.
Price fixing and other forms of collusion are illegal under current antitrust laws. However, current antitrust laws may be insufficient when competing companies delegate their pricing decisions to an algorithm without agreeing to fix prices. Current law requires proof of an agreement to fix prices before condemning the conduct. When pricing decisions of multiple competitors are delegated to a single algorithm, that agreement may not exist even though the use of the algorithm may have the same effect as a traditional agreement to fix prices. This type of conduct has already occurred in rental housing.
To strengthen current price fixing law, this Preventing Algorithmic Collusion Act would do the following:
- Close a loophole in current law by presuming a price-fixing “agreement,” when direct competitors share non-public information through a pricing algorithm to raise prices;
- Increase transparency by requiring companies that use algorithms to set prices to disclose that fact and give antitrust enforcers the ability to audit the pricing algorithm when there are concerns it may be harming consumers;
- Ban companies from using non-public, competitively sensitive information from their direct competitors to inform or train a pricing algorithm;
- Direct the Federal Trade Commission to study pricing algorithms’ impact on competition.
The legislation was led by U.S. Senator Amy Klobuchar, D-Minn. Along with Wyden, the bill was co-sponsored by Senators Dick Durbin, D-Ill., Richard Blumenthal, D-Conn., Mazie Hirono, D-Hawaii, Ben Ray Luján, D-N.M., Chris Murphy, D-Conn., Jeanne Shaheen, D-N.H., and Peter Welch, D-Vt. The Preventing Algorithmic Collusion Act is endorsed by Consumer Reports, the Open Markets Institute, and Accountable.US.
