Unlocking Manufacturer Utopia: AI’s Role in Perfect Price Discrimination

The growing use of algorithms, including those powered by Artificial Intelligence (AI) to optimize prices, has generated significant debate about their benefits and potential adverse effects on competition and consumers. Two key issues emerge in this debate: the use of algorithms that facilitate personalized pricing, based on individual consumer data - a practice that results in price discrimination, referred to as algorithmic price discrimination - and their potential to facilitate tacit collusion. While the algorithmic tacit collusion has received considerable attention in both academic and policy discussions, the potential harm arising from algorithmic price discrimination remains comparatively underexplored. This article examines whether the current competition law framework is adequate to tackle algorithmic price discrimination that harms consumers. It argues for robust competition law enforcement under Article 102(a) TFEU to ensure that algorithmic pricing does not become a tool for exploitative abuse in the digital economy. However, it also outlines how case law is underdeveloped and, in some aspect, hostile to submitting personalized pricing under Article 102(a) TFEU.