,,ii #aaith ,,congress #ast ,session ,s4 #bcb ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,january #bc1 #bjbe,ms4 ,klobuchar 7for herself1 ,mr4 ,wyden1 ,mr4 ,durbin1 ,mr4 ,welch1 ,ms4 ,hirono1 ,mr4 ,lujn1 ,mrs4 ,shaheen1 ,mr4 ,murphy1 and ,mr4 ,blumenthal7 introduced the following bill2 which was read twice and referred to the ,committee on the ,judiciary ,a ,,bill ,to prevent anticompetitive conduct through the use of pricing algorithms by prohibiting the use of pricing algorithms that can facilitate collusion through the use of nonpublic competitor data1 creating an antitrust law enforcement audit tool1 increasing transparency1 and enforcing violations through the ,sherman ,act and ,federal ,trade ,commission ,act1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,preventing ,algorithmic ,collusion ,act of #bjbe4 #b4 ,definitions ,in this ,act3 7#a7 ,antitrust laws ,the term antitrust laws-- 7,a7 has the meaning given that term in subsection 7a7 of the first section of the ,clayton ,act 7#ae ,u4,s4,c4 #ab72 and 7,b7 includes section #e of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #de74 7#b7 ,commercial terms ,the term commercial terms means-- 7,a7 level of service2 7,b7 availability2 7,c7 output1 including quantities of products produced or distributed or the amount or level of service provided2 or 7,d7 rebates or discounts made available4 7#c7 ,commission ,the term ,commission means the ,federal ,trade ,commission4 7#d7 ,distribute2 distribution2 distributing ,the terms distribute1 distribution1 and distributing include selling1 licensing1 providing access to1 or otherwise making available by any means1 including through a subscription or the sale of a service4 7#e7 ,nonpublic competitor data ,the term nonpublic competitor data-- 7,a7 means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person1 or a related market2 and 7,b7 does not include information distributed1 reported1 or otherwise communicated in a way that does not reveal any underlying data from a competitor1 such as narrative industry reports1 news reports1 business commentaries1 or generalized industry survey results4 7#f7 ,nonpublic data ,the term nonpublic data means information that is not widely available or easily accessible to the public1 including information about price1 commercial terms1 and related products or services1 regardless of whether the data is attributable to a specific competitor or anonymized4 7#g7 ,person ,the term person has the meaning given that term in subsection 7a7 of the first section of the ,clayton ,act 7#ae ,u4,s4,c4 #ab74 7#h7 ,price ,the term price means the amount of money or other thing of value1 whether tangible or not1 expected1 required1 or given in payment for any product or service1 including compensation paid to an employee or independent contractor for services provided4 7#i7 ,pricing algorithm ,the term pricing algorithm means any computational process1 including a computational process derived from machine learning or other artificial intelligence techniques1 that processes data to recommend or set a price or commercial term that is in or affecting interstate or foreign commerce4 #c4 ,competition law enforcement audit 7a7 ,in general ,a person using or distributing a pricing algorithm1 upon a written request by the ,attorney ,general or the ,commission1 shall1 not later than #cj days after the date of the written request1 or any later date approved by the ,attorney ,general or the ,commission1 respectively1 provide to the ,attorney ,general or the ,commission1 respectively1 a written report on each pricing algorithm identified in the request4 7b7 ,report contents ,each report under subsection 7a7 shall include-- 7#a7 information on whether the person is responsible for the development or distribution of the pricing algorithm1 or whether a third party is responsible for the development or distribution of the pricing algorithm1 including the identity and contact information of any other person responsible for the development or distribution of the pricing algorithm2 7#b7 information on whether the pricing algorithm autonomously sets prices or commercial terms and whether there is human review of any recommendation or decision of the pricing algorithm2 7#c7 an explanation of the rules or processes that the pricing algorithm uses to set or recommend prices or commercial terms2 7#d7 a description of all data the pricing algorithm uses to set or recommend prices or commercial terms1 including data used to train the algorithm2 7#e7 all sources and collection processes1 including the frequency of collection1 of any data that the pricing algorithm uses to set or recommend prices or commercial terms2 7#f7 whether the pricing algorithm engages in price discrimination by setting or recommending different prices or commercial terms for-- 7,a7 different customers seeking identical or nearly identical products or services1 and if so1 the factors used in differentiating among such customers2 or 7,b7 different employees or independent contractors providing substantially similar services1 and if so1 the factors used in differentiating among such employees or independent contractors2 and 7#g7 any changes made to the pricing algorithm between the date of receipt of the request under subsection 7a7 and the date of certification under subsection 7c74 7c7 ,certification of report ,the ,chief ,executive ,officer1 ,chief ,economist1 ,chief ,technology ,officer1 or a corporate officer of similar authority of a person shall certify1 under penalty of perjury1 the accuracy of a report under subsection 7a7 submitted by the person4 7d7 ,confidentiality ,all information submitted in a report under subsection 7a7 shall be treated as confidential and shall be considered to be privileged and confidential trade secrets and commercial or financial information exempt under subsection 7b77#d7 of section #eeb of title #e1 ,united ,states ,code1 from being made available to the public under subsection 7a7 of that section4 7e7 ,information sharing 7#a7 ,in general ,a report under subsection 7a7 may be shared-- 7,a7 between the ,department of ,justice and the ,commission2 and 7,b7 with the ,national ,institute of ,standards and ,technology for technical assistance in understanding the report4 7#b7 ,limitation ,the ,national ,institute of ,standards and ,technology shall not disclose the contents of a report shared under paragraph 7#a7 or the analysis of the report by the ,national ,institute of ,standards and ,technology to any person1 except the ,department of ,justice or ,commission1 whichever sought the technical assistance4 7f7 ,rules of construction ,nothing in this section shall-- 7#a7 limit the ability of the ,commission or the ,attorney ,general to issue a civil investigative demand1 to issue a subpoena1 to seek discovery in the course of litigation1 or otherwise obtain information through other means available to the ,commission or the ,attorney ,general2 or 7#b7 restrict the use of information submitted in a report under subsection 7a7 in the course of a formal investigation1 enforcement action1 litigation1 trial1 or other proceeding1 in accordance with the confidentiality procedures applicable to such proceeding4 #d4 ,preventing collusive activity in pricing algorithms 7a7 ,in general ,it shall be unlawful for a person to use or distribute any pricing algorithm that uses1 incorporates1 or was trained with nonpublic competitor data4 7b7 ,civil action ,if the ,commission or the ,attorney ,general has reason to believe that a person has violated subsection 7a71 the ,commission1 in its own name by any of its attorneys designated by it for such purpose1 or the ,attorney ,general may bring a civil action against the person in an appropriate district court of the ,united ,states to seek to recover-- 7#a7 a civil penalty of-- 7,a7 not less than #aj1jjj1 adjusted for inflation on the basis of the ,consumer ,price ,index1 for each day during which the violation occurs or continues to occur2 or 7,b7 the sum of the price of each product or service sold using the pricing algorithm in violation of subsection 7a72 and 7#b7 other appropriate relief1 including an injunction or other equitable relief4 7c7 ,effective ,date ,subsection 7a7 shall take effect on the date that is #ij days after the date of enactment of this ,act4 #e4 ,algorithmic price fixing 7a7 ,presumption of agreement ,with respect to the use of a pricing algorithm that would violate section #d of this ,act1 there shall be a presumption for purposes of section #a of the ,sherman ,act 7#ae ,u4,s4,c4 #a7 that the defendant entered into an agreement1 contract1 combination1 or conspiracy in restraint of trade and for purposes of section #e7;a7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #de7;a77 that the defendant has engaged in an unfair method of competition if the plaintiff establishes that-- 7#a7 the defendant distributed the pricing algorithm to #b or more persons-- 7,a7 with the intent that the pricing algorithm be used to set or recommend a price or commercial term of a product or service in the same market or a related market2 or 7,b7 and #b or more persons used the pricing algorithm to set or recommend a price or commercial term of a product or service in the same market or a related market2 or 7#b7 7,a7 the defendant used the pricing algorithm to set or recommend a price or commercial term of a product or service2 and 7,b7 the pricing algorithm was used by another person to set or recommend a price or commercial term of a product or service in the same market or a related market4 7b7 ,rebuttal ,the presumption under subsection 7a7 shall not apply to a defendant if the defendant did not develop or distribute the pricing algorithm and the defendant demonstrates by clear and convincing evidence that the defendant did not have actual knowledge or could not have reasonably known that the pricing algorithm used nonpublic competitor data4 7c7 ,joint and several liability ,in a civil case in which the presumption under subsection 7a7 is applicable1 any persons that distributed the pricing algorithm and knew1 or could reasonably have known1 that the pricing algorithm would use1 incorporate1 or be trained with nonpublic competitor data shall be jointly and severally liable for any violation of section #a of the ,sherman ,act 7#ae ,u4,s4,c4 #a7 or section #e7;a7 of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #de7;a774 7d7 ,relation to antitrust laws ,nothing in this section shall impair or limit the applicability of the antitrust laws4 7e7 ,effective date ,subsection 7a7 shall take effect on the date that is #ij days after the date of enactment of this ,act4 #f4 ,transparency in pricing algorithms 7a7 ,in general ,any person that has #e1jjj1jjj or more in annual revenue that uses a pricing algorithm to recommend or set a price or commercial term shall clearly disclose1 as applicable-- 7#a7 to a customer1 before the customer purchases the relevant product or service1 that the price or a commercial term1 as applicable1 is set or recommended by a pricing algorithm2 and 7#b7 to a current or prospective employee or independent contractor that the price or a commercial term for services rendered as an employee or independent contractor is set or recommended by a pricing algorithm4 7b7 ,additional disclosures 7#a7 ,price discrimination ,if applicable1 a disclosure under subsection 7a7 shall state that the pricing algorithm sets or recommends different prices or commercial terms for-- 7,a7 different customers seeking identical or nearly identical products or services2 or 7,b7 employees or independent contractors providing substantially similar services4 7#b7 ,third-party algorithm ,if applicable1 a disclosure under subsection 7a7 shall-- 7,a7 state that the pricing algorithm was developed or distributed by a person other than the person making the disclosure2 and 7,b7 provide the identity of the person that developed or distributed the pricing algorithm4 7c7 ,enforcement ,failure to provide a disclosure under subsection 7a71 including the information required under subsection 7b71 shall constitute an unfair or deceptive act or practice under section #e of the ,federal ,trade ,commission ,act 7#ae ,u4,s4,c4 #de74 7d7 ,civil action ,if the ,commission has reason to believe that a person has violated subsection 7a7 or 7b71 the ,commission1 in its own name by any of its attorneys designated by it for such purpose1 may bring a civil action in an appropriate district court of the ,united ,states to recover-- 7#a7 a civil penalty of not less than #e1jjj1 adjusted for inflation on the basis of the ,consumer ,price ,index1 for each day during which the violation occurs or continues to occur2 and 7#b7 other appropriate relief1 including an injunction or other equitable relief4 7e7 ,relation to antitrust laws ,nothing in this section shall impair or limit the applicability of the antitrust laws4 #g4 ,,ftc study ,not later than #b years after the date of enactment of this ,act1 the ,commission shall publish the results of a study of the use of pricing algorithms1 including information on-- 7#a7 the prevalence of pricing algorithms2 7#b7 the frequency of the use of pricing algorithms to engage in price or wage discrimination2 7#c7 the potential for persons to use pricing algorithms to engage in behavior that increases prices1 lowers wages1 reduces output1 lowers quality1 deters innovation1 or otherwise harms the competitive process outside of the price fixing context2 7#d7 the potential benefits or efficiencies of pricing algorithms2 7#e7 any industries1 sectors1 or markets in which pricing algorithms may warrant additional oversight or regulation to protect competition and consumers2 and 7#f7 recommendations for additional legislation1 regulation1 or rulemaking relating to competition and consumer protection issues arising from the use of pricing algorithms4