Pricing Algorithms, Collusion and Corporate Compliance

Pricing algorithms are now commonly used by sellers as a way to maximize profits. Attorney Jeffrey Cross, in this Today’s General Counsel article, considers a question that sellers in some industries will have good reason to address: When do pricing algorithms facilitate tacit collusion and how should corporate antitrust compliance programs handle this risk? A now familiar example of a market structured by a pricing algorithm is airline tickets, where data about supply and demand, cost of the service – and, in some cases, prices being charged by competitors – can be part of the equation. Tacit collusion, the author points out, is not per se unlawful, but there are a number of so-called “plus factors” that can raise it to the level of an antitrust violation. It’s important to know what they are and how to steer clear of them.