Winston Sponsors, Jeanifer Parsigian Speaks at GCR Live’s Annual Women in Antitrust Conference

Winston partner Jeanifer Parsigian spoke at GCR Live’s Women in Antitrust conference in Washington, D.C. on  November 12, 2024. Her panel “Cartels: Can Software Programs Be a Hub for Collusion?” focused on pricing algorithms and software programs and their potential to enable illegal price coordination among competitors in violation of competition laws.

KEY TAKEAWAYS

• Pricing tools and software programs are increasingly under antitrust scrutiny due to their ability to analyze and share proprietary data and recommend pricing strategies to users. Algorithms are widely used in sectors like hotels and healthcare, where they help companies process complex pricing information, often collecting information that is not otherwise available in the public domain. However, this use may raise competitive concerns, especially when such information is shared among competitors. While these tools are often developed to enhance efficiency, their use can inadvertently facilitate price fixing or anticompetitive information exchange among competitors. Globally, enforcement authorities are responding to these challenges.
• In some case, the problematic conduct is relatively clear cut and involves direct communication among competitors with algorithms being used to effectuate an illegal price-fixing agreement. Most cases being litigated in the United States today are more nuanced, including those alleging hub-and-spoke conspiracies. These situations often involve a central platform (the hub) collecting and distributing data to competitors (the spokes), but to succeed, plaintiffs generally must prove agreements along the rim (i.e., agreements between the various competitor spokes). Plaintiffs often rely on circumstantial evidence, such as information exchanges and market outcomes, to demonstrate agreements. Courts examine intent, the role of algorithms in pricing decisions, and whether competitors knowingly coordinated their behavior, even if communication was indirect.
• The U.S. Department of Justice (DOJ) has become increasingly active in addressing algorithmic collusion, as seen in multiple statements of interest it has filed, as well as its own civil suit challenging a property management software company. DOJ’s position is that concerted action can arise from the use of algorithms, even without direct agreements among competitors. DOJ has also pursued cases based solely on a theory of anticompetitive information sharing under the rule of reason, rather than claiming a price-fixing agreement.
• The UK’s Competition and Markets Authority (CMA) recently issued guidance cautioning about the use of pricing algorithms that could distort competition. In the UK, information exchange among competitors may be a standalone infringement. It can also facilitate concerted practice or a hub-and-spoke conspiracy.
• This international scrutiny reflects a growing consensus that businesses must manage these tools responsibly to avoid legal risks. It also underscores the importance of robust compliance programs. Companies should regularly audit their pricing algorithms, including the extent to which the algorithms use non-public data of the users and their competitors, carefully consider how they use these tools to set prices – whether as an input of competitive intelligence or an outsourcing entirely of pricing authority, , and educate employees about the potential risks of using these tools.

Winston is a proud sponsor of GCR Live: Women in Antitrust, an annual event which brings together leading private practice lawyers, academics, economists, and government representatives for a full-day conference championing female experts in antitrust. Jeanifer also served on the steering committee for this year’s conference.