Do you know about the french fry cartel? In 2022, four major potato producers started using a pricing tool called “PotatoTrac.” Soon after, the price of frozen french fries surged by 47%, even as the underlying costs declined. And it’s not just french fries. 

Across the country, competitors are becoming colluders, using pricing tools to work together to inflate the prices of everything, from housing to healthcare. 

Before, when competitors wanted to collude to raise prices—a practice called price fixing—they’d meet behind closed doors and in a smoky backroom. With algorithmic pricing tools, the collusion between companies is not as obvious.

Many courts have agreed that if companies in the same industry agree to use the same data and the same digital tools to determine their prices, they’re no longer acting as competitors—they’re colluding. But we have no laws that act as official guidelines for judges when they’re deciding if companies are participating in algorithmic price-fixing. 

That’s why Teri Olle, Director of Economic Security California Action, spoke in favor of the Preventing Algorithmic Price Fixing Act (AB 325) during the California Assembly Privacy Committee hearing on May 1st. This is what she had to say:

Teri Olle’s testimony

Thank you, Madam Chair, and members of the committee. My name is Teri Olle, and I’m the director of Economic Security California Action, and a proud cosponsor of AB 325. And I thank the Majority Leader for her leadership on this important issue.

Since this is the privacy and consumer protection committee, I want to talk about why this bill matters so much for consumers, which also includes small businesses. It’s a basic tenet of capitalism that competition between rivals benefits us all. 

Fighting over customers with better prices or superior products is what spurs dynamic markets, innovation, and bountiful consumer choice. When would-be competitors agree not to challenge each other, when they collude to fix prices or restrict supply, this is a perversion of the free market and results in higher prices, fewer choices, and stifled innovation.

The essence of price fixing is that agreement, which has always been hard to detect since they’re not made in public – think of a handshake deal in a smoke-filled room or a sidebar at the annual trade association convention.

Digital technology has made participating in these agreements easier, and detecting them harder. But unfortunately, this kind of price-fixing has been going on for many years—we are behind and playing catch-up. From chicken to housing, from construction equipment to a veritable frozen French Fry cartel – as a former US DOJ expert recently said, there is a Real Page in every industry where anyone has bothered to look.  

The result? Industries lock up competition, they jack up prices for everything from the daily basics to the fun stuff. Let’s be really clear: lack of competition NEVER benefits the consumer. Rather, regular people are worse off, and the affordability crisis that every voter says is their most pressing issue gets worse. 

This bill makes it clear that distributing or using a pricing algorithm to set prices with competitors is collusion – just because it happens through code, instead of conversation, does not change the violation or the harm. 

Bad actors in multiple sectors are trying to find wiggle room to use technology to engage in conduct that has been a violation of antitrust law since the beginning of antitrust law. The need for clarity in the law is what makes this bill necessary, and stopping harm to people is what makes it urgent. 

It simply says that you cannot use digital tools to break the rules. Thank you. 

Now, your testimony

Have you seen examples of tech-driven price fixing in your life? We want to hear your story. By sharing your experience, you help lawmakers and the public understand what changes need to happen to ensure a better tech economy for everyone.