Antitrust Concerns with AI Pricing

As businesses increasingly turn to AI to optimize their operations and stay competitive, the use of these powerful tools is raising new questions under the antitrust laws. While AI offers immense benefits in terms of efficiency, innovation, and responsiveness to market conditions, it also has the potential to facilitate anticompetitive conduct.

One key area of concern is the use of AI pricing algorithms. These algorithms can rapidly process vast amounts of data on competitor prices, consumer demand, and other market factors, allowing companies to adjust their prices in real time. While this can lead to more efficient and dynamic pricing, it also raises the risk of unlawful price fixing.

Under Section 1 of the Sherman Act and Section 5 of the FTC Act, agreements that unreasonably restrain trade are prohibited. This includes not only explicit price fixing agreements, but also more subtle forms of coordination enabled by AI. For example, if competitors use the same or similar AI pricing algorithms, they may arrive at parallel pricing decisions even without direct communication. Over time, this could lead to a de facto agreement to maintain prices at a certain level.

Another potential antitrust pitfall is the use of AI to facilitate traditional antitrust conspiracies. The DOJ has already brought cases against online sellers who used pricing algorithms to implement a price fixing scheme. As AI becomes more sophisticated, the risk of these AI-aided cartels may grow.

Perhaps most concerning is the prospect of AI systems independently reaching anticompetitive agreements, without any human direction. As AI develops the ability to learn, strategize, and adapt based on market conditions, it’s conceivable that AI systems could conclude that colluding with a competitor is the optimal way to maximize profits. This type of “robot collusion” pushes the boundaries of traditional antitrust concepts of agreement and intent.

To mitigate these risks, companies using AI need to be proactive in their compliance efforts. This includes maintaining detailed records of the AI’s design and objectives, carefully considering the competitive impact of AI deployments, and monitoring the use of similar AI systems by others in the market. Building in antitrust compliance safeguards at the outset, as the European Commission has suggested, may also be prudent.