AI Frontier Institute

Providing for prohibited conduct involving algorithmic pricing structures and artificial intelligence, for enforcement by Attorney General and for civil remedies; and imposing criminal penalties.

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Pennsylvania Senate Bill 1507, the "Collusive Algorithms Act," has been referred to the Consumer Protection and Professional Licensure Committee and has not been enacted. If enacted, it would make it unlawful to distribute, develop for distribution, or use "collusive algorithmic pricing structures." These are AI or algorithmic pricing tools that use, or were trained on, nonpublic competitor data to recommend or set prices or commercial terms in a relevant antitrust market (Sections 3 and 4(a)(1)-(3)). It would also bar using "common artificial intelligence," meaning AI not used exclusively by one person, to set prices for goods or services offered or sold in Pennsylvania (Section 4(a)(4)). Section 4(b) gives an exception to the "use" prohibition in Section 4(a)(3) if substantial evidence shows the user did not know the tool used nonpublic competitor data. Section 4(c) sets criminal penalties. Distribution is a first-degree felony with a fine of up to $1,000,000 per distribution. Developing for distribution is a second-degree felony with a fine of up to $100,000,000 per structure. Using a collusive structure is a second-degree felony with a fine of up to $100,000 per pricing decision or recommendation. Using common AI to set prices is a second-degree misdemeanor with a fine of up to $5,000 per pricing decision or recommendation. The Attorney General could investigate and prosecute violations and seek injunctions (Section 5). A court could order restitution after a permanent injunction (Section 6). The Attorney General could accept assurances of voluntary compliance (Section 7) and issue regulations (Section 9). Purchasers who suffer an ascertainable loss could sue privately for the greater of actual damages or $1,000. A court could award up to treble actual damages, but not less than $1,000, plus attorney fees and costs (Section 8). The act would not limit federal antitrust remedies. Except as provided in Section 4(a)(4), it would not bar algorithmic or proprietary AI pricing tools that do not use nonpublic competitor data (Section 10). It would take effect immediately (Section 11).

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