WASHINGTON—U.S. Senators Chris Murphy (D-Conn.), a member of the U.S. Senate Health, Education, Labor, and Pensions Committee, and Richard Blumenthal (D-Conn.) joined their Senate colleagues in introducing 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 would make such collusion illegal to lower costs for families and support small businesses.

"These pricing algorithms are just one more tactic corporations use to get around the law and screw regular people. It’s how the poultry industry colludes to keep the price of chicken high,” said Murphy. “If we really care about lowering costs and disrupting the corrupt status quo, this is the kind of bill that Congress should pass.”

“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 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 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 would:

  1. 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;
  2. 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;
  3. Ban companies from using non-public, competitively sensitive information from their direct competitors to inform or train a pricing algorithm; and
  4. Direct the Federal Trade Commission (FTC) to study pricing algorithms’ impact on competition. 

U.S. Senators Amy Klobuchar (D-Minn.), Ron Wyden (D-Ore.), Dick Durbin (D-Ill.), Mazie Hirono (D-Hawaii), Ben Ray Luján (D-N.M.), Jeanne Shaheen (D-N.H.), and Peter Welch (D-Vt.) also cosponsored the legislation.

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

Full text of the legislation is available HERE.

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