AI Personalized Pricing May Violate Competition Law
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- Dr. Miroslava Marinova of the University of East London co-authored a study arguing that AI could let powerful firms charge each customer a different price for the same product based on predicted willingness to pay
- The research, published in the Journal of Competition Law & Economics and co-written with Dr. Christian Bergqvist of the University of Copenhagen, says the core risk is hidden, personalized pricing consumers cannot see or understand — not necessarily higher average prices
- The paper finds that even when overall prices do not rise, consumers react strongly when they discover they are paying more than others without a clear reason, reducing trust and affecting behavior
- AI systems can analyze browsing history, location, and purchase history to tailor individual offers, making personalized pricing far more precise and scalable than previous methods
- The study argues that where a dominant firm is involved, personalized pricing lacking transparency and justification could constitute an abuse of dominant position under EU and UK competition law
- The UK Government has signaled it is considering whether the Competition and Markets Authority should receive stronger powers to investigate algorithms across its competition and consumer protection functions
Why it matters: If regulators accept the paper's framing, invisible algorithmic price discrimination by dominant firms becomes an enforceable competition-law violation rather than a market quirk. The UK government's consideration of expanded CMA algorithm-investigation powers gives that legal theory a near-term policy pathway, meaning everyday pricing could face transparency and fairness requirements the law has not previously imposed.
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