This executive summary lays out highlights from the report Competition in an Age of Algorithms: A Competition by Design Approach to Algorithmic Pricing written by Max Bell School Master of Public Policy students Angelina Freeman, Elijah Maubert, Isabella Coronado Doria, and Husein Pumaya Yakubu as part of the 2025 Policy Lab.
Access the summary and presentation below, and read their full report here.
Algorithmic pricing (AP)—the practice of using automated algorithms, often powered by artificial intelligence, to dynamically set or recommend prices for goods or services in real time based on data inputs such as market conditions, competitor actions, and consumer behaviour—is increasingly prevalent across Canadian markets. While AP enhances efficiency and responsiveness to consumer demand, it simultaneously facilitates significant risks, including tacit collusion, abuse of dominance, and reinforcing barriers for small businesses. These challenges have exposed the limitations of Canada’s existing regulatory frameworks, which currently lack the agility and clarity to adequately manage the rapid evolution of AI-driven market behaviours.
Through comprehensive desk research and extensive consultations involving 34 expert stakeholders across academia, government, industry, and civil society, this Policy Lab project has identified critical gaps in Canada’s ability to effectively oversee AP technologies. Stakeholders highlighted several pressing concerns, notably the limited enforcement capacity within the Competition Bureau, fragmented regulatory oversight, and the technical challenges of detecting and addressing anti-competitive behaviours facilitated by opaque, self-learning algorithms.
In response, we propose Competition-by-Design (CBD), a proactive approach aimed at embedding competition safeguards directly into algorithmic pricing systems from inception. The CBD framework consists of three key components:
- A Voluntary Registry that encourages firms to transparently disclose their use of AP, creating valuable market insights and enabling regulators to monitor trends and behaviours.
- A “Competition by Design” Principle, establishing clear guidance on responsible algorithmic pricing aligned explicitly with Canadian competition law and best practices.
- A Third-party Certification System, established through collaboration with the Standards Council of Canada, which provides firms an independent means to verify their compliance with pro-competitive standards.
Modelled after successful international initiatives, the CBD framework is strategically designed to foster market confidence, reduce regulatory uncertainty—especially beneficial to small and medium-sized enterprises—and position Canada as a global leader in responsible AI governance. By providing clear guidelines and incentives rather than imposing new legislative burdens, the CBD approach promotes innovation while ensuring fairness and transparency in digital markets.
Ultimately, the Competition-by-Design framework represents an adaptable, scalable strategy for Canada, capable of evolving alongside rapid technological advancements. Its voluntary nature lays the groundwork for future integration into broader AI governance and potential legislative frameworks, establishing a sustainable and resilient foundation for competitive, transparent, and trustworthy markets.
