Algorithmic pricing tools raise antitrust and collusion concerns

The use of advanced revenue-management systems by retailers, hotels, landlords, and airlines is raising legal questions regarding algorithmic collusion. While competition law allows firms to compare prices, it prohibits coordination that replaces competition with collaboration.

A significant concern involves hub-and-spoke algorithms, where multiple market players use the same provider to set prices. The Competition Commission of India has noted that such arrangements can result in identical price levels across a market.

Under India’s Competition Act, 2002, agreements that cause an appreciable adverse effect on competition are prohibited. Recent amendments have expanded how enterprises can be presumed to be part of such agreements, even if they do not engage in identical or similar trades.