Pricing algorithms are nothing new. They are, generally speaking, computer programs intended to help sellers optimize prices in real time, or close to it. These programs can use data on demand, costs, or even competitors’ prices to “learn” to set the prices of products. What is new is the proliferation of these programs across industries and the emergence of artificial intelligence-driven pricing algorithms. 

With more sophisticated programs, some are concerned that these algorithms will allow competitors to collude without any discussions, let alone any agreements. Of course, it is not inherently anticompetitive to use algorithms to set prices. But it is possible that AI-driven algorithms may begin to functionally collude on price, without any human input from their companies. 

Because traditional antitrust frameworks hinge on humans agreeing to fix prices, there is limited precedent guiding how algorithmic pricing challenges could be handled. But the Department of Justice and the Federal Trade Commission have expressed their confidence that existing legal frameworks would capture these potential antitrust problems. 

FTC Chair Lina Khan assured the public in a May 2023 opinion article that “[t]he F.T.C. is well equipped with legal jurisdiction to handle the issues brought to the fore by the rapidly developing A.I. sector, including collusion, monopolization, mergers, price discrimination and unfair methods of competition.” And the DOJ is similarly of the belief that current laws are sufficient to address technological collusion. A few months ago, the DOJ filed a statement of interest in an ingoing lawsuit involving allegations that rent-setting software inflated prices, asserting that, “[l]ongstanding legal principles apply with equal force to this new machinery” and insisting that Section 1“applies where, as here, the common pricing agent is a common software algorithm.”

Notwithstanding the agencies’ confidence, two recently introduced Senate bills attempt to address potential competition problems. In the Senate Judiciary Committee’s December 13, 2023 hearing entitled “The New Invisible Hand? The Impact of Algorithms on Competition and Consumer Rights,” Senator Amy Klobuchar expressed doubt that current antitrust laws were sufficient to regulate potential anticompetitive conduct: “Whether the conspiracy takes place in a server room, or a boardroom shouldn’t matter under the antitrust laws. But it isn’t clear whether our current antitrust laws are sufficient to stop that practice.”

Senator Klobuchar’s Preventing Algorithmic Collusion Act (S-3686) would meaningfully alter antitrust law in a number of ways. It would create an enforcement audit tool and require Attorney General or FTC approval of pricing algorithms. It would allow a “presumption” of a price-fixing “agreement” when direct competitors share competitively sensitive information through a pricing algorithm to raise prices. It would also forbid companies from using non-public/competitively sensitive information from their direct competitors to inform or train a pricing algorithm, and would create a presumption of illegal collusion if competitors violate that ban.

Senator Ron Wyden also introduced a bill (S-3692) intended to target the impact of AI-driven algorithmic pricing in the housing market. (The text of his bill is not posted, but its official title is “A bill to prohibit the use of algorithmic systems to artificially inflate the price or reduce the supply of leased or rented residential dwelling units in the United States.”)

While passage may be but a distant, minute possibility, these bills and other statements from the DOJ and FTC are worth keeping in mind as the ever-dynamic landscape of AI-driven technologies continues to evolve. 

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Photo of David Munkittrick David Munkittrick

David Munkittrick is a litigator and trial attorney. His practice focuses on complex and large-scale antitrust, copyright and entertainment matters in all forms of dispute resolution and litigation, from complaint through appeal.

David has been involved in some of the most significant antitrust…

David Munkittrick is a litigator and trial attorney. His practice focuses on complex and large-scale antitrust, copyright and entertainment matters in all forms of dispute resolution and litigation, from complaint through appeal.

David has been involved in some of the most significant antitrust matters over the past few years, obtaining favorable results for Fortune 500 companies and other clients in bench and jury trials involving price discrimination and group boycott claims. His practice includes the full range of antitrust matters and disputes: from class actions to competitor suits and merger review. David advises antitrust clients in a range of industries, including entertainment, automotive, pharmaceutical, healthcare, agriculture, hospitality, financial services, and sports.

David also advises music, publishing, medical device, sports, and technology clients in navigating complex copyright issues and compliance. He has represented some of the most recognized names in entertainment, including Sony Music Entertainment, Lady Gaga, U2, Madonna, Daft Punk, RCA Records, BMG Music Publishing, Live Nation, the National Academy of Recording Arts and Sciences, Universal Music Group and Warner/Chappell.

David maintains an active pro bono practice, supporting clients in the arts and in immigration proceedings. He has been repeatedly recognized as Empire State Counsel by the New York State Bar Association for his pro bono service, and is a recipient of Proskauer’s Golden Gavel Award for excellence in pro bono work.

When not practicing law, David spends time practicing piano. He recently made his Carnegie Hall debut at Weill Recital Hall with a piano trio and accompanying a Schubert lieder.

David frequently speaks on antitrust and copyright issues, and has authored or co-authored numerous articles and treatise chapters, including:

  • Causation and Remoteness, the U.S. Perspective, in GCR Private Litigation Guide.
  • Data Breach Litigation Involving Consumer Class Actions, in Proskauer on Privacy: A Guide to Privacy and Data Security Law in the Information Age.
  • Location Privacy: Technology and the Law, in Proskauer on Privacy: A Guide to Privacy and Data Security Law in the Information Age.
  • FTC Enforcement of Privacy, in Proskauer on Privacy: A Guide to Privacy and Data Security Law in the Information Age.
  • The Role of Experts in Music Copyright Cases, Intellectual Property Magazine.
  • Nonprofit Education: A Historical Basis for Tax Exemption in the Arts, 21 NYSBA Ent., Arts, & Sports L.J. 67
  • A Founding Father of Modern Music Education: The Thought and Philosophy of Karl W. Gehrkens, Journal of Historical Research in Music Education
  • Jackson Family Wines, Inc. v. Diageo North America, Inc. Represented Diageo in trademark infringement litigation
Photo of Kelly Landers Hawthorne Kelly Landers Hawthorne

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and…

Kelly Landers Hawthorne is an associate in the Litigation Department and a member of the Antitrust and Product Liability groups. She represents clients in litigations and due diligence across a range of industries, including consumer products, life sciences, healthcare, education, hospitality, sports and entertainment.

Kelly also maintains a diverse pro bono practice. She received Proskauer’s Golden Gavel Award for excellence in pro bono work in 2019.

She is a frequent contributor to Proskauer’s Minding Your Business blog, where she authors articles related to price gouging issues.

Kelly is also a member of the Proskauer Women’s Alliance Steering Committee, where she serves on subcommittees focused on highlighting and providing professional development opportunities for women at the firm.

Prior to her legal career, Kelly was a Teach For America corps member and taught middle school in Washington, DC.

While at Columbia Law School, Kelly served as an articles editor of the Columbia Journal of Law & the Arts and interned for the Honorable Sandra Townes of the U.S. District Court for the Eastern District of New York.