Pricing algorithms draw competition law scrutiny in New Zealand

New Zealand businesses using algorithmic or AI-driven pricing face growing competition law scrutiny, especially where shared software could coordinate prices or exchange commercially sensitive non-public competitor data. Independent adoption of the same pricing tool as competitors is unlikely, by itself, to breach competition law, but risk rises when companies delegate significant pricing decisions to common systems or use models trained on sensitive competitor information.

The main risks under the Commerce Act 1986 are price fixing under section 30 and broader conduct that may substantially lessen competition under section 27. Regulators may examine whether businesses relied on autopilot pricing, routinely accepted recommendations without independent judgment, corresponded with software providers about competitors, used internal incentives to follow recommendations, or adopted tools marketed as improving market discipline or raising prices.

US enforcement has focused on similar concerns, but court outcomes remain mixed and no case has yet reached trial. Businesses are advised to understand how pricing software collects data, whether information is shared with other users, and whether AI models are trained on non-public data. Emerging LLM agent-based pricing systems could create new risks if they communicate with competitors or obtain non-public data without user knowledge.