U.S. Senator Ron Wyden (D-Ore.) last week introduced the Preventing Algorithmic Collusion Act, an antitrust legislation designed to prevent companies from utilizing algorithms to collude and set higher prices.
According to a press release issued by Wyden, current antitrust laws, while prohibiting price fixing and other forms of collusion, may not sufficiently address situations where companies use algorithms for pricing. Existing law demands evidence of an explicit agreement to fix prices, which might be lacking when multiple competitors utilize a single algorithm for this purpose. The press release highlighted that this type of anti-competitive behavior has emerged in the rental housing sector and could soon spread to other industries.
Wyden's press release stated that the Preventing Algorithmic Collusion Act, introduced on February 2nd, would close a loophole in existing law by "presuming a price-fixing ‘agreement’ when direct competitors share competitively sensitive information through a pricing algorithm to raise prices." The proposed legislation would also mandate companies to disclose their use of pricing algorithms. Moreover, it would empower antitrust investigative agencies with the ability to audit these pricing algorithms when concerns arise and prohibit companies from training such algorithms using sensitive information from their direct competitors.
"Collusion is collusion, whether you do it over the phone or using an algorithm," Wyden said in a press release. "This legislation, along with my Preventing 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."
On January 31st, according to Wyden's press release, he along with Sen. Peter Welch (D-Vt.), introduced another piece of legislation - the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act - aimed at preventing companies from using algorithms to inflate rental prices.
