Information Sharing, Pricing Algorithms, and Antitrust Liability: Where Is the Line?

Antitrust enforcers and private plaintiffs over the past few years have pursued increasingly aggressive theories of liability based on information exchange and the use of algorithmic pricing and revenue management software. Several recent developments underscore this push to expand liability. 

First, the White House released a report that claims the use of pricing algorithms has led to decreased competition and increased residential rents in certain areas. Second, federal antitrust agencies withdrew decades-old industry guidance on the scope of lawful exchange of information and, more recently, collaborations among competitors, in each case citing the rise of algorithms and other artificial intelligence (AI) as reasons for the withdrawal. Third, the U.S. Department of Justice (DOJ) has engaged in an amicus campaign setting out its expansive view of liability for information sharing and pricing algorithms in recent court filings. Fourth, a federal judge found plaintiffs had alleged a per se violation in a case involving pricing algorithms, which will bolster enforcement efforts moving forward. Defendants, for their part, have pushed back vigorously, noting among other things the procompetitive benefits of these software tools. With the impending change of administration leadership, the key question on everyone’s minds is, where will courts and enforcers draw the line?

White House Releases Report on the Cost of Rental Pricing Algorithms

On December 17, 2024, the White House’s Council of Economic Advisers released a report that claims to “quantify the anticompetitive impact of pricing algorithms on rents across the country.” The CEA  analysis used publicly available data to estimate that rental pricing algorithms cost renters a combined $3.8 billion in 2023.

The report’s release draws renewed public attention to antitrust enforcement of pricing algorithms, immediately before a change in administrations. However, it’s unclear if the incoming Trump administration leadership will continue to prioritize cases involving the use of pricing algorithms. Beyond federal enforcement, the CEA report will likely be cited by private plaintiffs and some State AGs as further support for the view that use of these algorithms should be more widely unlawful.

Federal Agencies Cite Algorithms in Withdrawal of Guidance on Competitor Collaborations

On December 11, 2024, DOJ and the Federal Trade Commission (FTC) withdrew their Antitrust Guidelines for Collaborations Among Competitors (“Guidelines”) issued in 2000. The agencies stated that the Guidelines, which explain how federal agencies analyze antitrust issues raised by competitor collaborations, were no longer reliable in part because they “fail to address the competitive implications of modern business combinations and rapidly changing technologies such as artificial intelligence, algorithmic pricing models, vertical integration, and roll ups.” The agencies instead expressed that they would assess collaborations on a case-by-case basis.

The FTC voted 3–2 to withdraw the Guidelines, with Republican commissioners Andrew Ferguson and Melissa Holyoak dissenting. The dissenting commissioners criticized the decision to withdraw guidance shortly before an administration change, with Commissioner Holyoak also noting that the lack of new guidance “leaves businesses grasping in the dark.” Commissioner Ferguson, the incoming FTC Chair, will likely change course on this issue.

DOJ Files Statements Regarding Information Sharing and Pricing Algorithms

The DOJ has been taking steps to expand the scope of liability for information exchange beyond traditional theories about price-fixing. DOJ’s October 2024 Statement of Interest[1] (“Statement”) in In re Pork Antitrust Litigation provided further insights into DOJ’s concerns regarding information sharing.  The case, brought by private plaintiffs, alleges claims of collusion in the processed pork industry through the sharing of information with Agri Stats, a third party. DOJ’s recent Statement takes a more aggressive enforcement position than its own civil case against Agri Stats,[2] which also challenges information sharing.  

In the Statement, DOJ argued that information sharing can violate Section 1 of the Sherman Act in two ways: (1) information sharing could provide circumstantial evidence of a price-fixing agreement; and (2) an agreement to share information can itself be an antitrust violation if it harms competition. 

While price-fixing agreements are subject to the per se standard (meaning the agreement itself is the violation), DOJ made it clear that “standalone” information-sharing claims are subject to the more flexible rule-of-reason analysis, which requires courts to evaluate the full set of surrounding circumstances to determine harm to competition. 

Also in October 2024, DOJ detailed its concerns regarding pricing algorithms in an amicus brief filed in support of plaintiffs in Gibson v. Cendyn Group, LLC.[3] The plaintiffs had challenged the use of pricing algorithms in setting Las Vegas hotel rates, but their claims were dismissed by the district court.  Seeking to reverse the district court’s decision, DOJ argued that (1) an “invitation” by an algorithm provider, followed by widespread adoption by competing customers, can serve as evidence of a conspiracy; and (2) agreements regarding the use of a common algorithm to serve as a “starting point” for prices can constitute per se violations, even if those prices are not binding or are not always followed.  DOJ also emphasized that the common use of algorithms could give rise to a rule of reason violation, even in the absence of a price-fixing agreement.

These filings indicate that pricing algorithms and other forms of information exchange are more likely to invite DOJ scrutiny where they facilitate the exchange of competitively sensitive information among competitors and/or are actually used to set prices.

Yardi Court Finds Allegations Sufficient for Per Se Violation in Algorithmic Pricing Case

A Washington district court recently held that collusion through pricing algorithms can be a per se violation of Section 1 of the Sherman Act. On December 4, 2024, the court denied defendants’ motion to dismiss claims brought by renters in Duffy v. Yardi Systems, Inc.[4] The plaintiffs there alleged that property management companies conspired to share competitively sensitive information with Yardi’s revenue management software, which generated rental recommendations that defendants allegedly followed. 

The Yardi court found that plaintiffs plausibly alleged a per se violation. Specifically, the court rejected defendants’ arguments that the “novel” nature of fixing prices using algorithms required the more flexible rule-of-reason standard. Instead, the court found that “[w]hen a conspiracy consists of a horizontal price-fixing agreement, no further testing or study is needed.”

The Yardi decision contrasts with a December 2023 decision in In re RealPage, Inc., Rental Software Antitrust Litigation, a case with similar allegations, where the court dismissed plaintiffs’ per se claims based in part on the novelty of pricing algorithms.[5] And when DOJ filed its own civil action against RealPage in August 2024 for similar conduct, DOJ pursued a rule-of-reason theory only, and not a per se theory.[6]

Looking Ahead

These developments, coming at the tail end of the Biden administration, confirm that scrutiny of information exchanges and pricing algorithms has been an enforcement priority.  The incoming Trump administration will likely impact enforcement activity in this space and, indeed, incoming FTC Chair Andrew Ferguson, has already expressed skepticism over recent changes to industry guidance. But legal uncertainty remains because of divergent court decisions and the lack of new guidance from federal enforcers.

Given this evolving environment and the lack of clarity as to where the line for liability is, companies should closely evaluate their policies and practices for how they share information, from whom they receive information, and whether or how they use increasingly popular pricing algorithms and revenue management software. 

[1] Statement of Interest of the United States, In re Pork Antitrust Litigation, Case No. 18-cv-01776-JRT-JFD (D. Minn. Oct. 1, 2024).

[2] United States v. Agri Stats, Inc., Case No. 0:23-cv-3009-JRT-JFD (D. Minn. filed Sept. 28, 2023). DOJ’s Agri Stats case, filed in September 2023, alleges a conspiracy amongst competitor processors to use Agri Stats, and also alleges agreements between Agri Stats and competitor processors. DOJ’s Statement, released in October 2024, takes a more aggressive position in arguing that “information-sharing arrangements run by a third-party reporting service” can satisfy the concerted-action element of Section 1 of the Sherman Act, without mention of an agreement amongst the competitors themselves.

[3] Brief for the United States as Amicus Curiae in Support of Plaintiffs-Appellants, Gibson v. Cendyn Group, LLC, Case No. 24-3576 (9th Cir. Oct. 24, 2024).

[4] Order Denying Defendants’ Joint Motion to Dismiss, Duffy v. Yardi Systems, Inc., Case No. 23-cv-01391-RSL (W.D. Wash. Dec. 4, 2024).

[5] In re RealPage, Inc., Rental Software Antitrust Litig. (No. II), Case No. 23-MD-03071, 2023 WL

9004806 (M.D. Tenn. Dec. 28, 2023).

[6] On December 6, 2024, RealPage indicated that DOJ had purportedly closed a criminal investigation into rental pricing practices.