Hirono, Colleagues Introduce Antitrust Legislation to Take on Algorithmic Price Fixing, Bring Down Costs

WASHINGTON, DC – Today, U.S. Senators Mazie K. Hirono (D-HI), Amy Klobuchar (D-MN), Ron Wyden (D-OR), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Ben Ray Lujan (D-NM), Chris Murphy (D-CT), Jeanne Shaheen (D-NH), and Peter Welch (D-VT) introduced the Preventing Algorithmic Collusion Act to prevent companies from using algorithms to collude to set higher prices. As recent reporting, a Justice Department lawsuit, and multiple private lawsuits have shown, big corporations are using algorithms to raise prices and limit competition, including companies like RealPage that have facilitated collusion to increase rents by more than $3 billion in 2023 alone. This legislation will make such collusion illegal to lower costs for families and support small businesses.

“Algorithmic price fixing enables businesses to artificially inflate their prices while hiding their collusion behind technology, stifling competition, and leaving consumers to suffer the consequences,” said Senator Hirono. “This legislation will help to ensure transparent competition on price, prevent big business from manipulating the market, encourage healthy competition, and protect consumers and small businesses from being taken advantage of.”

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, and we must ensure that it does not spread to other sectors of our economy with the proliferation of algorithmic pricing.  

To strengthen current price fixing law, this legislation will:

• 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; and
• Direct the Federal Trade Commission (FTC) to study pricing algorithms’ impact on competition. 

The Preventing Algorithmic Collusion Act is endorsed by Consumer Reports, the Open Markets Institute, and Accountable.US. 

The full text of the legislation is available here.

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