Letter to Competition Bureau Canada Regarding Discussion Paper on Algorithmic Pricing and Competition

July 25, 2025

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Competition Bureau Canada
50 rue Victoria
Gatineau, Quebec, K1A 0C9

Submitted via online form at: https://competition-bureau.canada.ca/en/feedback-form-algorithmic-pricing-and-competition-discussion-paper

Re: Comments on discussion paper: Algorithmic pricing and competition

The Canadian Chamber of Commerce represents over 200,000 businesses of all sizes across the country. We thus recognize that strong enforcement of competition laws is essential for a strong economy. Competition encourages innovation and benefits consumers through lower prices, more choice, and higher quality products and services.

We acknowledge that the advent and increasingly common use of dynamic pricing algorithms may merit an exploration of their economic effects and how these tools intersect with our competition laws. Such an exploration can also provide value in order to foster public trust in this technology.

We believe that pricing algorithms are generally pro-competitive and economically beneficial. Potential adverse effects on competition arise only in a narrow set of circumstances. Any competition enforcement to address concerns with pricing algorithms should therefore adopt a cautious approach that does not stifle pro-competitive conduct, innovation, and consumer benefit.

We submit the following comments for the Bureau’s consideration in response to the discussion paper on algorithmic pricing and competition.

Pricing algorithms are pro-competitive

Dynamic pricing algorithms allow companies to optimize prices in response to market conditions such as demand, competitor prices, or inventory levels. Pricing algorithms may be rules-based or have the ability to learn over time to pursue a specific goal such as balancing supply and demand or maximizing customer retention. Personalized pricing algorithms can also incorporate a broader range of data to offer targeted discounts to consumers.

Studies have shown that dynamic and personalized pricing algorithms can increase static efficiency and social welfare[1]. Personalized pricing allows firms to offer personalized discounts to individual consumers, which attracts new customers and increases market coverage, enabling firms to increase output above what they would produce with uniform pricing. This increased output can in turn lower overall price levels to the benefit of all consumers.

While the use of pricing algorithms has raised concerns around potential tacit price coordination, the nature of personalized pricing creates a powerful disincentive against such coordination: when firms can discount to each consumer individually, in a competitive market, it is in the interest of firms to expand and not restrict output. Similarly, individualized pricing can increase the value of innovation by allowing new products to reach a greater number of customers[2]. Both these effects are pro-competitive.

Furthermore, because pricing algorithms may monitor competitor prices in order to offer the best value, they can intensify price competition in competitive markets, which is also beneficial for consumers. As they become more widely available, pricing algorithms can also equip small businesses and new entrants with previously unavailable tools to aggressively compete against incumbents.

Finally, by automating time-consuming tasks associated with the pricing process (e.g. monitoring, analysis), pricing algorithms can improve productivity and reduce production costs. Marketing expenditure on promotions that are not relevant to consumers can also be reduced. These savings are often directly passed on to consumers through additional offers or lower prices.

Competition concerns are limited to a narrow set of circumstances

The principal concern of competition authorities with the advent of pricing algorithms is that their use may lead to tacit price collusion. While this hypothetical concern is understandable, the risk of such collusion is generally very low, particularly where there is robust competition.

It is important to emphasize that tacit collusion is distinct from parallel pricing, a form of price matching commonly observed across the retail sector. This common practice is not a violation of competition statutes and can be pro-competitive when firms actively monitor and lower prices. The Competition Act already provides the Competition Bureau with the necessary tools to rightly address collusion, where firms explicitly agree to fix prices to abuse of joint dominance or exclude competitors.

Concerns relating to algorithmic pricing are currently being explored in a small number of anti-trust cases in the U.S., E.U. and Canada alleging the use of algorithmic pricing violates competition law in markets like gasoline, retail, real estate, and hospitality. These cases, which examine the transparency and the nature of the pricing algorithms, have not concluded on the economic impact and will be examined on a case-by-case basis. It is thus advisable that the Bureau adopt a cautious approach to competition enforcement involving pricing algorithms.

Generally, pricing algorithms are economically beneficial as they intensify competition, incentivize innovation and increase availability of goods and services. While competition concerns can arise in certain circumstances, such cases are relatively limited and can be addressed by existing laws and analytical frameworks. We nonetheless commend the Bureau for undertaking this study to ensure that competition enforcement keeps pace with evolving technologies.

Sincerely,
Liam MacDonald
Director, Policy and Government Relations
Canadian Chamber of Commerce
lmacdonald@chamber.ca

[1] “Personalised Pricing in the Digital Era.” OECD, 2018. https://www.oecd.org/en/publications/personalised-pricing-in-the-digital-era_db4d9c9c-en.html

[2] Ibid