Antitrust Law Daily Wrap Up, ANTITRUST NEWS:Democrat Senators spearhead Preventing Algorithmic Conclusion Act, (Feb 7, 2025)

By Justin Marcus Smith, J.D.

The Senators said they are concerned that price-setting algorithms will exploit legal loopholes to unfairly raise prices “on everything from rent to rideshares.”

A clutch of Democrat U.S. senators announced their introduction of the Preventing Algorithmic Collusion Act. The bill is aimed at preventing companies from using algorithms to collude to set higher prices. Senators introducing the legislation include U.S. Senator Amy Klobuchar (D., Minn.), joined by Senators Ron Wyden (D., Ore.), Dick Durbin (D., Ill.), Richard Blumenthal (D., Conn.), Mazie Hirono (D., Hawaii), Ben Ray Luján (D., N.M.), Chris Murphy (D., Conn.), Jeanne Shaheen (D., N.H.), and Peter Welch (D, Vt.). Sen. Klobuchar is Chair of the Senate Competition Policy, Antitrust, and Consumer Rights subcommittee. According to her office, Consumer Reports, the Open Markets Institute, and Accountable.US have endorsed the proposed legislation. Sen. Klobuchar stressed her view that the 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.” Meanwhile, in a letter to Secretary of Defense Hegseth, several Senators expressed concern over whether landlords may be using RealPage to price gouge military families.

Legal loopholes. The accompanying press release by Senator Klobuchar’s office described the senators’ concern that current antitrust laws “may be insufficient when competing companies delegate their pricing decisions to an algorithm without agreeing to fix prices.” Current antitrust law requires human agreement for price-fixing conduct to be unlawful. The senators noted that delegation to an algorithm may have the same effect as a traditional agreement to fix prices.

Objectives. According to Sen. Klobuchar’s press release, the proposed legislation will:

• Close the price-fixing agreement loophole in current antitrust law by presuming an agreement where direct competitors share non-public information through a pricing algorithm to raise prices;

• Increase transparency by requiring disclosure of algorithm use and giving antitrust enforcers an ability to audit the algorithm;

• Ban companies from using non-public, competitively sensitive information from direct competitors to inform or train a pricing algorithm;

• Direct the FTC to study how pricing algorithms are affecting competition.

DOJ complaint. Sen. Klobuchar’s press release referenced the Justice Department’s recent lawsuit against RealPage, a property management software company. The Justice Department accused RealPage of engaging in an unlawful information-sharing scheme and for illegally monopolizing or attempting to monopolize the market for commercial revenue management software. U.S. v. RealPage, Inc., No. 1:24-cv-00710-LCB-JLW. The government alleged that RealPage software nudges landlords to increase their rents in response to the rent increases of competing landlords. Sen. Klobuchar’s press release mentioned that she and Sens. Durbin and Corey Booker (D., N.J.) urged the Justice Department to investigate RealPage in November 2022.

As amended on January 7, 2025, the Justice Department complaint against RealPage added six of the nation’s largest landlords as defendants for participating in algorithmic pricing schemes that harmed renters. The landlords are: Greystar Real Estate Partners LLC (Greystar); Blackstone’s LivCor LLC (LivCor); Camden Property Trust (Camden); Cushman & Wakefield Inc and Pinnacle Property Management Services LLC (Cushman); Willow Bridge Property Company LLC (Willow Bridge); and Cortland Management LLC (Cortland). Contemporaneous with the amended complaint, the Justice Department announced a proposed consent degree with Cortland. If approved, the consent decree will, among other things, require Cortland to stop using the same algorithm as its competitors without a corporate monitor (see Antitrust News, Jan. 8, 2025).

Other efforts. Sen. Klobuchar’s press release listed a variety of other legislative efforts that she and others say they are undertaking to “update our competition laws.” Most notably, at least in the RealPage context, Sen. Klobuchar’s press release said she joined Sen. Wyden in previously introducing the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act “to ensure that large landlords cannot skirt antitrust law and collude to increase rent prices across the country.” The release did not otherwise elaborate or distinguish how the two pieces of proposed legislation might operate in conjunction with each other.

Senators’ comments. Sen. Wyden observed, “Collusion is collusion, whether you do it over the phone or using an algorithm.” He contended the Preventing Algorithmic Collusion Act, along with his End Rent Fixing Act, “will send a strong message to corporations that they won’t get away with coordinating to ratchet up prices on consumers.”

Sen. Durbin said he was joining the effort because of the need to “prevent businesses from using these [algorithmic] tools to reduce competition.” Sen. Blumenthal echoed concern about “coercive anticompetitive software”, while Sen. Hirono said the legislation will help “prevent big business from manipulating the market[.]” Sens. Blumenthal, Luján, and Shaheen all used the word “predatory” to describe at least some uses of pricing algorithms. Sen. Murphy contended that the poultry industry has been using pricing algorithms to “keep the price of chicken high.” Sen. Welch urged, “Transparency is a key tenet of doing good business, and consumers expect businesses to treat them fairly.

Letter to Hegseth. Meanwhile, in a letter to Secretary of Defense Hegseth, several Senators expressed concern over whether landlords may be using RealPage to price gouge military families.

They wrote that use of RealPage may enable landlords to charge more and raise rents more aggressively to the detriment of military families.

Companies: RealPage, Inc.

News: Antitrust ConsumerProtection FederalTradeCommissionNews AntitrustDivisionNews AINews