Federal Trade Commission Chief, Lina Khan, has issued a statement suggesting that new technologies may be facilitating price-fixing and discriminatory practices against consumers. According to Khan, companies can now establish fixed prices without explicit coordination, thanks to advancements in AI and algorithmic technology. This represents a fresh hurdle for regulators tasked with overseeing the market.
Khan, considered one of the more assertive antitrust regulators in recent American history, has demonstrated particular interest in the potential harm technological developments may pose to consumers. A record for merger challenges was set by antitrust regulators at the Federal Trade Commission and the Justice Department for the fiscal year concluding September 30, 2022, according to Bloomberg News.
The FTC notably blocked Illumina, a biotech company, from acquiring cancer-screening company Grail in a transaction exceeding $7 billion in 2023. Following this, the FTC, the Justice Department, and the Department of Health and Human Services collectively unveiled a website, healthycompetition.gov, on April 18 to streamline the process of reporting suspicious anti-competitive behavior in the healthcare industry.
However, the Biden administration’s approach to antitrust enforcement has been often criticized by the American Hospital Association, the largest trade group for the industry. The Association argued that the FTC and Justice Department’s proposed guidance to companies reflected a basic aversion to mergers in a September statement .
Price-fixing drains the market of competition and typically results in the inflation of available goods and services. The FTC pointed out that such practices remain unlawful even if they are facilitated by the application of algorithms. Khan highlighted the example of residential property managers who can set identical prices through the same algorithms, voiding the need for overt collaboration.
The FTC chief also acknowledged the use of AI and algorithms for setting prices for unique consumers based on personal behavioral data. As healthcare companies adapt the structures of their businesses for maximized profits, the FTC is shifting its evaluative approach for identifying potentially harmful behavior for consumers. Khan further expressed that the FTC has noted escalation in criticism concerning how firms apply their monopoly power, resulting in increased prices, reduced services, and dire working conditions for healthcare staff.