Press Release

Welch, Colleagues Introduce Antitrust Legislation to Prevent Algorithmic Price Fixing

Feb 2, 2024

WASHINGTON, D.C.  – U.S. Senator Peter Welch (D-Vt.)a member of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, joined Senators Amy Klobuchar (D-Minn.), Ron Wyden (D-Ore.)Dick Durbin (D-Ill.), Mazie Hirono (D-Hawaii), and Richard Blumenthal (D-Conn.) in introducing the Preventing Algorithmic Collusion Act to prevent companies from using algorithms to set higher prices for consumers. 

“Transparency is a key tenet of doing good business, and consumers expect businesses to treat them fairly. But increasingly we’ve seen competitors throw antitrust laws to the wind by using pricing algorithms to avoid competition, leaving consumers to suffer the consequences. The Preventing Algorithmic Collusion Act works to close existing loopholes and increase transparency around how companies use pricing algorithms to make sure consumers aren’t getting a raw deal,” said Senator Welch
“Price fixing is illegal under our antitrust laws, but the development of automated price-setting algorithms can create loopholes in current law that could be used to unfairly raise prices on everything from rent to rideshares,” said Senator Klobuchar.“My bill will strengthen antitrust law and guarantee needed transparency to prevent companies from using algorithms to fix prices to ensure consumers are able to get the full benefits of competition.”  
“Collusion is collusion, whether you do it over the phone or using an algorithm. This legislation, along with myPreventing the Algorithmic Facilitation of Rental Housing Cartels Act, will send a strong message to corporations that they won’t get away with coordinating to ratchet up prices on consumers,” said Senator Wyden
“Businesses are increasingly turning to algorithms to determine pricing for their products.  In a technology-based world, we need to prevent businesses from using these tools to reduce competition,” said Senator Durbin.  “That’s why I’m joining my colleagues in introducing the Preventing Algorithmic Collusion Act, which would ensure that pricing algorithms aren’t being used to take advantage of consumers and inflate prices.”  
“Healthy, transparent competition is critical to making sure consumers and small businesses are treated fairly in the market, but algorithmic price fixing stifles competition and empowers big businesses to raise prices by hiding their collusion behind technology,” said Senator Hirono. “This legislation will encourage transparent competition on price, prevent big business from manipulating the market, and drive down prices for consumers and small businesses.” 
“Predatory algorithms significantly suppress competition in today’s markets and allow companies to collude to raise prices to unaffordable levels. The Preventing Algorithmic Collusion Act will eliminate coercive anticompetitive software and empower consumers,” said Senator Blumenthal.  
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. Current law requires proof of an explicit agreement to fix prices. 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. Algorithmic pricing has proliferated across different sectors of the economy, most notably in rental housing.   
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 competitively sensitive 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 competitively sensitive information from their direct competitors to inform or train a pricing algorithm; 
  • Direct the Federal Trade Commission (FTC) to study pricing algorithms’ impact on competition.  

The Preventing Algorithmic Collusion Act is endorsed by the Open Markets Institute and American Economic Liberties Project.  
A member of the Senator Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, Senator Welch has championed efforts to strengthen antitrust laws and protect consumer rights. 

This week, Senator Welch joined Senator Wyden in introducing the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act to crack down on companies that inflate rents with price-fixing algorithms by ensuring that large landlords cannot skirt antitrust law and collude to increase rent prices across the country. 

This Congress, Senator Welch and Bennet (D-Colo.) reintroduced the Digital Platform Commission Act, legislation to create an expert federal agency to provide comprehensive regulation of digital platforms to protect consumers, promote competition, and safeguard the public interest. This month, Senator Peter Welch led Sens. Bennet, Graham (R-S.C.), and Warren (D-Mass.) in writing to U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) to reiterate their call for a new independent federal agency to oversee the tech sector.