Antitrust law is that Engine of free enterprise: It shapes countless industries, from tech to restrooms, beer to baseball, and healthcare to hardware. Antitrust law determines price, quality, variety, innovation and opportunity.
Today, artificial intelligence is rapidly changing the way companies perceive, think and adapt to the market. Companies across all industries use machine learning to uncover valuable insights without extensive employee engagement. But these game-changing capabilities are disrupting the way companies interact with competitors and consumers.
Experienced competition and consumer protection attorneys can help companies seize the opportunities presented by AI while navigating the crisis new land of regulatory and litigation risk. While it’s wrong to think of AI as a black box, the complexity of AI systems can make the argument opaque. This means that connections between AI findings and rational business justifications are at risk of being obscured or even lost altogether.
Yet regulators are unlikely to excuse consumer and competition concerns simply because an organization cannot explain why certain actions were taken and others not. There are legal risks under the Sherman Antitrust Act, the Federal Trade Commission Act (FTC), the Robinson-Patman Act, and state antitrust and consumer protection laws. By implementing policies and processes that maintain human control and accountability, organizations can minimize legal risk and avoid unintended consequences.
A proactive and individual approach is crucial. AI impacts competition and consumers in many ways, even when used for core business functions.
AI helps companies make pricing decisions by quickly responding to immediate changes in demand, inventory, and input costs. By synthesizing and summarizing large amounts of complex data, it can be an important aid in creating and adjusting pricing policies. But the results that AI-supported pricing generates can also be favored as per se illegal agreements such as price fixing or supply manipulation. According to FTC Chairman Lina KhanAI “can facilitate collusive behavior that drives up prices unfairly.”
These concerns can arise directly or indirectly from the use of AI to perform diverse activities such as benchmarking, breaking down information, signalling, sharing information or analyzing price trends. For example, pricing algorithms can raise antitrust issues when competitors use them to enforce a pre-agreement, algorithm providers initiate or organize an agreement, companies use algorithms to drastically increase prices, or even when competitors independently use algorithms that subsequently engage in collusive behavior set day.
The Antitrust Division of the US Department of Justice stresses that “the rise of data aggregation, machine learning and pricing algorithms … can increase the competitive value of historical data” and warrants “a review of how we think about the exchange of competitively sensitive information”.