Algorithmic Collusion Case Settles for $141 Million

A major AI antitrust case has concluded in Tennessee, with Defendants settling the case for $141 million. The case involved real estate and property management companies setting prices using algorithmic pricing software from RealPage, Inc. However, RealPage, Inc. was allegedly incorporating nonpublic data from its users into its pricing algorithm. This, Plaintiffs argued, constituted a “hub-and-spoke” price fixing scheme among Defendants. A recent memo from Freshfields discusses the case and offers three key takeaways:

“Sharing Nonpublic Competitively Sensitive Information is Being Scrutinized. Companies should carefully consider inputs provided to pricing software vendors and have a clear understanding of how the software generates pricing recommendations for licensees.

Algorithmic Pricing Software Remains in the Hot Seat. Algorithmic price-fixing and information-sharing claims by state Attorneys General and private plaintiffs in the healthcare, agriculture, and construction industries continue to progress, making this an area to watch moving forward.

Compliance Remains Key. Engaging antitrust counsel to advise on disclosing proprietary information will be helpful to minimize antitrust liability. Implementing antitrust compliance training tailored to the use of artificial intelligence and algorithmic pricing software and engaging counsel to advise on business operations and licensing agreements will be useful to limit antitrust liability.”

We’ve written about the dangers of AI and antitrust in the past, and this settlement is another example of the real risk posed by AI pricing algorithms. Companies should carefully review any pricing software they use to ensure compliance.