New technologies are making pricing more dynamic, personalized, and sometimes harder for consumers and rivals to observe and compare. These shifts raise familiar questions about the line between competition policy and consumer protection, and how antitrust should treat pricing practices that may increase efficiency or output while reshaping how prices are discovered and experienced in the market.
We gave our group of antitrust experts a simple Prompt:
How should antitrust law assess pricing practices that may increase efficiency or output, but also make prices more dynamic, more opaque, or more individualized?
Their responses addressed market definition, price discrimination, “surveillance pricing,” the boundary between unilateral conduct and collusion, and consumer welfare. Here are their full answers.
Answering antitrust challenges one question at a time
The Chamber has assembled a range of preeminent experts in the field of antitrust from across a wide political spectrum to offer timely views on key questions of antitrust law and policy. This group brings together senior enforcers spanning seven administrations, from both the Antitrust Division at the Department of Justice and the Federal Trade Commission.
Some experts started from first principles (a frequent topic on the Prompt): what is antitrust meant to accomplish, and should consumer welfare remain the organizing framework?
"This prompt goes to the heart of the debate over the purpose of antitrust law — what is it supposed to accomplish, and what is it intended to encourage and protect? Dynamic pricing and individualized pricing tend to enhance efficiency and increase output and welfare, but they are discriminatory. Many of us would favor efficiency and output, even at a cost of discrimination and possible perceived unfairness, and many of would apply a consumer welfare test in assessing specific practices. Obviously, though, those views are not uniformly held."
"Antitrust should be focused on promoting a free and competitive market. Practices that increase efficiency and output should go in the antitrust plus column. Fairness concerns by legislators (e.g., whether prices are dynamic or opaque) should be addressed using tools other than antitrust, especially if the mechanism for addressing such concerns hinders competition or consumer welfare."
One respondent drew an even sharper boundary:
"Unless there is a [Robinson-Patman Act] or monopolization violation, this is a consumer protection issue, not an antitrust issue. Antitrust should not go after unilateral pricing decisions."
Some respondents emphasized an effects inquiry, while distinguishing potentially efficient price discrimination from checkout-stage add-ons that impair comparison shopping:
"Antitrust law addresses dynamic pricing through the traditional consumer welfare standard. There is some tension with market definition as the more specialized the price, the less traditional market definition may be useful."
"These practices should be evaluated by looking at the effects on consumer welfare/surplus. The effect of individualized pricing is in general ambiguous, although recent academic work suggests that consumer welfare is more likely to decrease than previously thought. Opaque pricing (as in adding unexpected charges at checkout) is problematic both from a consumer protection point-of-view and from a competition perspective because it denies consumers the ability to make informed decisions."
"Prices that increase allocative efficiency and total output are likely to involve price discrimination. Higher prices may also reflect new pricing strategies embodying quality or service improvements (see rpm). Dynamic and individualized pricing may as well. I am not sure how one measures price “opaqueness” in the abstract, but if the point is that prices may change rapidly that may implicate price discrimination as well. Alternatively, if opaqueness refers to “add-ons” to the final prices that are only revealed at checkout, such pricing may create some consumer uncertainty ex ante, but such pricing may also allow firms to adjust prices efficiently based on changing conditions in specific geographic markets. Bottom line, though some consumers may complain in the abstract regarding some of these pricing strategies, those strategies may actually lead to more efficient pricing over time and total welfare gains, but effects on consumer surplus may be ambiguous. (I am not considering cases of deception or section 5(n) FTC Act unfairness.)"
Some contributors urged caution with ill-defined terminology, and asked what evidence and theory of harm would be required (absent collusion) to make this an antitrust issue rather than a transparency/privacy concern:
"Tread carefully! These terms are ill-defined. And in any event, taking them at face value, “dynamic,” “individualized,” and even “opaque” prices can be extremely procompetitive as they should result in more closely matching prices charged to consumer demand and value. I worry that “consumer protection” concerns about so-called surveillance pricing are motivating an ill-considered attempt to leverage antitrust."
"To the extent this question addresses ‘surveillance pricing’, guidance would be welcome as to whether (in the absence of evidence of collusion) federal enforcement interest will be limited to consumer protection (transparency and privacy considerations seem most relevant) and, if not, what would be necessary by way of evidence and a theory of harm to support an antitrust violation for this category of dynamic pricing."
Finally, one respondent flagged merger review as an area where more intensive dynamic pricing could make price effects and consumer harm easier to show:
"I could see some mergers supercharging incentives to raise prices and profits through more intensive use of dynamic pricing, making it easier to show adverse price effects and consumer harm."
