eCommerce executive Daniel Aston, the former director and part owner of Trod Limited, pleaded guilty in January to conspiring to fix the prices of posters sold on online marketplaces.
Both Aston and his company were charged in 2015 with price fixing, and the company pleaded guilty to the charges in 2016. According to the Department of Justice (DOJ), Aston’s eventual arrest and guilty plea was the DOJ Antitrust Division’s “first online marketplace prosecution involving algorithmic pricing tools.”
Aston had been conspiring with other sellers on Amazon.com to fix the price of certain posters sold in the U.S. for more than a year. Part of the conspiracy was an agreement among the sellers to adopt pricing algorithms that set prices based on which posters were popular on Amazon. The DOJ believed they accomplished this by writing computer code that “instructed algorithm-based software to set prices in conformity with” their agreement.
This code “let the conspirators’ products appear near the top of the search query without having to compete with each other,” explained Makan Delrahim, the antitrust chief at the DOJ. Delrahim said that the conspirators programmed their algorithm to search for the lowest price for a poster offered by another competitor, then set their prices just below that, according to Multichannel News. Another of the conspirators, David Topkins, pleaded guilty to price fixing charges back in 2016.
Online sellers’ use of price-setting algorithms is not inherently anticompetitive. It only becomes a potential violation of antitrust laws if the sellers use the algorithms to conspire to fix prices at the expense of their competitors.