A photo shows the Competition Bureau's official website in Ottawa, taken on Monday, October 2, 2023. (Credit: Sean Kilpatrick / The Canadian Press)
Canada’s Competition Bureau is inviting people to share their views as it investigates how companies are increasingly using computer algorithms to decide prices for products and services. This move comes in response to the growing use of automated pricing tools across different industries.
A new paper released Tuesday by the bureau revealed that over 60 businesses in Canada are already relying on algorithmic systems to set prices. These tools adjust prices automatically and often instantly, depending on changing conditions. Industries where this is common include ride-hailing services, concert ticket sales, hotel bookings, and more.
The bureau says that while these systems can offer benefits—such as helping businesses become more efficient and competitive—they also come with serious risks. One major concern is that companies could end up setting prices in unison without even realizing it. If several firms use the same algorithm or pricing model, prices across an entire market could become synchronized. This could reduce genuine competition and lead to higher costs for consumers.
In simpler terms, even without talking to each other, companies might start charging similar prices just because they’re using the same software. The Competition Bureau warns that this kind of indirect price coordination could potentially break the rules of the Competition Act, which aims to protect fair business practices in Canada.
There’s another issue too—some companies might use these tools to undercut their competition in unfair ways. For instance, an algorithm might be set up to drop prices only for customers who were planning to buy from a rival company. That means instead of lowering prices for everyone, a business could target just a specific group, making it harder for competitors to survive. This is known as predatory pricing, and it could seriously harm smaller or newer businesses trying to enter the market.
The Bureau previously confirmed in February that it had launched a probe into the possible misuse of AI-powered pricing in Canada’s real estate rental sector. It’s now expanding its research to other markets and wants Canadians to weigh in.
The goal of the public consultation is to better understand both the benefits and risks of these automated pricing systems. The Bureau wants to hear from businesses, tech experts, and everyday citizens about their experiences and concerns. Their feedback will help shape the Bureau’s next steps, including whether new regulations or actions might be necessary to prevent misuse.
With pricing now being shaped more by algorithms than people, this investigation could lead to important changes in how digital tools are regulated in Canada’s economy. Consumers are encouraged to participate and help ensure that pricing remains fair and competitive.
