FTC Warns: Algorithmic Pricing Can Violate Antitrust Laws
The U.S. Federal Trade Commission (FTC) has issued a stark warning to businesses. It claims that agreeing to use pricing algorithms can potentially violate federal antitrust laws, specifically Section 1 of the Sherman Act. This alert follows a Statement of Interest filed in the case Duffy v. Yardi Systems, Inc.
The FTC's blog post and a joint Statement of Interest from several agencies highlight increased scrutiny of algorithmic pricing practices. The FTC argues that businesses cannot use algorithms to evade price-fixing allegations. It rejects arguments that price deviations or competitor 'cheating' undermine a conspiracy.
The FTC is particularly interested in the role of private equity in alleged algorithmic price fixing, especially in the rental housing industry. Companies like Invitation Homes, American Homes 4 Rent, and Front Yard Residential have been mentioned in relation to this issue. The FTC is paying close attention to the use of pricing-related algorithms across various industries.
The FTC's guidance clarifies that an agreement to use shared pricing algorithms can still be unlawful, even if businesses retain some pricing discretion. However, it's important to note that this guidance is a general overview and does not constitute legal advice.
The FTC's warning serves as a reminder to businesses that using algorithms to assist in determining prices may violate federal antitrust laws. Companies should be aware of the potential risks and ensure their pricing practices comply with the law. The FTC's increased scrutiny in this area underscores the importance of businesses reviewing and understanding their pricing strategies.
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