Algorithmic Collusion Crackdown: New Bill Targets Price-Fixing Software, Forces Transparency

The Preventing Algorithmic Collusion Act of 2025 is taking aim at companies using software to set prices, aiming to stop them from secretly jacking up costs or suppressing wages. The core idea? Prevent pricing algorithms from becoming tools for behind-the-scenes collusion that hurts consumers and workers. This isn't about blocking AI in business, it's about making sure these powerful tools play fair.

Cracking Down on Sneaky Pricing

The bill's main thrust is to prevent companies from using pricing algorithms to unfairly coordinate prices. It does this in a few key ways:

• No Competitor Data Allowed: It's now illegal to use or distribute a pricing algorithm that's been trained on non-public data from competitors (SEC. 4). Think of it like this: your local grocery store can't peek at the internal pricing strategies of the store across town to secretly match or slightly undercut their prices, especially if that information isn't publicly available. This is enforced with fines of at least $10,000 per day per violation, or the sum of the prices of each product or service sold using the violating algorithm (SEC. 4). The law goes into effect 90 days after enactment.
• Automatic Suspicion: If a pricing algorithm is found to be breaking existing antitrust laws, the bill automatically assumes there was an agreement to fix prices (SEC. 5). This puts the burden of proof on the companies using the algorithm to show they weren't colluding. Imagine two competing gas stations using the same third-party pricing software. If that software leads to identical price hikes, the law will now presume they're working together unless they can prove otherwise. The defendant can rebut the assumption if they did not create or distribute the algorithm, and could not have known the algorithm used confidential competitor data (SEC. 5 (b)).
• Transparency Rules: Any business with annual revenue over $5,000,000 that uses pricing algorithms must tell their customers and employees/contractors about it before any transaction or work agreement (SEC. 6). They also have to disclose if the algorithm sets different prices for similar things, and who developed it. This means you'll have a right to know if the price you're paying for, say, a ride-sharing service or an online product is being set by an algorithm, and whether that algorithm is treating you differently than other customers. Failure to do so is considered an unfair or deceptive practice, and the FTC can fine the business at least $5,000 per day (SEC. 6).

The Government Wants Answers

The bill also gives the government new powers to investigate how companies are using pricing algorithms. The Attorney General or the Federal Trade Commission (FTC) can now demand a detailed report from any company using these algorithms (SEC. 3). This report has to explain:

• Who made the algorithm.
• Whether it sets prices automatically or with human oversight.
• The rules and data the algorithm uses.
• If it price discriminates, and how.
• Any changes made to the algorithm after the government's request.

A company's CEO, CTO, Chief Economist, or equivalent has to certify this report is accurate, under penalty of perjury (SEC. 3). This information is kept confidential, but it can be shared between the Department of Justice and the FTC, and even with the National Institute of Standards and Technology for analysis (SEC. 3). Think of it as a mandatory peek under the hood of these pricing systems.

The Big Picture

The Preventing Algorithmic Collusion Act is a direct response to concerns that pricing algorithms could be used to manipulate markets in ways that are hard to detect and even harder to prove. By increasing transparency and creating stricter rules, the bill aims to level the playing field for consumers and smaller businesses. The FTC is also tasked with a major study (SEC. 7) to examine the broader impact of pricing algorithms, with results due within two years of the Act's passage. This study will look at how often these algorithms are used, whether they're used for price or wage discrimination, their potential to harm competition, and even their potential benefits. The report will include recommendations for any new laws or regulations that might be needed. While the bill aims to protect against collusion, it also acknowledges that these algorithms could have benefits. The FTC study is designed to sort out the good from the bad, and potentially lead to further refinements in the law.