Pricing Algorithm Toolkit: Vendor Diligence, Data Governance, and Litigation Defense

Document type: Toolkit Practice area: Antitrust — Price Fixing and Cartels Jurisdiction: United States Last reviewed: 5 September 2026

Tool 1 — Vendor diligence questionnaire

Send in writing. Require written answers. Keep them.

Data inputs

1. What data does the Product require the subscriber to contribute? List every field.
2. At what frequency and with what lag is contributed data transmitted?
3. Does the Product use data contributed by other subscribers? If so, describe.
4. Is any contributed data non-public at the time of contribution?
5. Does the Product use forward-looking data — planned prices, forward bookings, planned capacity?
6. What public data sources does the Product use?

Pooling and aggregation 7. In each market in which we operate, how many subscribers contribute? 8. What aggregate share of the relevant market do contributing subscribers represent? 9. At what level is contributed data aggregated before it affects output? 10. Could any subscriber identify another subscriber's data from the output, directly or by inference in a thin segment? 11. Is the Product available to any market participant on the same terms? Have you declined any prospective subscriber?

Output 12. Is output a market-level benchmark, or a subscriber-specific recommendation? 13. Do differently situated subscribers receive different recommendations? Demonstrate. 14. Does the Product ever recommend a price decrease? What proportion of recommendations are decreases? 15. How does the Product respond when a subscriber prices below the recommendation?

Adherence 16. Do you measure subscriber acceptance rates? For what purpose? 17. Do you disclose acceptance rates — aggregate or individual — to any subscriber? 18. Do you contact subscribers about declined recommendations? 19. Is any part of your fee tied to market-level outcomes rather than our own performance?

Disclosure and forums 20. Do you disclose the identity of subscribers to any other subscriber? 21. Do you convene subscribers at user groups, advisory boards, or conferences? Provide agendas for the last three. 22. Provide every sales, marketing, and implementation document you have given us or would give a prospective subscriber.

Compliance 23. Has the Product been the subject of any investigation, CID, subpoena, or litigation? Describe. 24. Have you obtained antitrust advice on the Product's design? Will you share the conclusions? 25. Will you warrant that output is individualized to each subscriber's own circumstances?

Drafting note. Question 22 is the one that matters most and the one vendors most often deflect. A vendor unwilling to produce its own sales materials in writing is telling you something.

Tool 2 — Contract clauses

Data contribution. Subscriber's contribution shall be limited to the fields listed in Schedule A, in each case with a lag of not less than [90] days, aggregated to the [regional] level. Subscriber shall not be required to contribute, and shall not contribute, any forward-looking pricing, capacity, or booking data.

No competitor disclosure. Vendor shall not disclose to Subscriber, and Subscriber does not wish to receive, (i) the identity of any other subscriber, (ii) any data attributable or reasonably traceable to any identified or identifiable competitor of Subscriber, (iii) any other subscriber's acceptance, adherence, or override rate, whether individual or aggregate, or (iv) any statement regarding the pricing intentions or expected conduct of any other subscriber.

No adherence obligation. Subscriber is under no obligation to accept any recommendation. Vendor shall not establish, monitor, report on, or communicate regarding any acceptance-rate target for Subscriber, and shall not contact Subscriber regarding any declined recommendation except at Subscriber's request.

Fees. Fees shall be calculated solely by reference to [subscription level / Subscriber's own revenue] and shall not be calculated by reference to any market-level, industry-level, or competitor-inclusive metric.

Individualization warranty. Vendor warrants that recommendations are generated from Subscriber's own cost, inventory, demand, and operating characteristics, and that two subscribers with materially different such characteristics will receive materially different recommendations.

No market-wide representations. Vendor represents that it has not made, and covenants that it will not make, to Subscriber or to any other person, any statement that the Product raises, stabilizes, or disciplines prices across a market, or that the Product's benefit depends on adoption by Subscriber's competitors.

Audit. Subscriber may, on [30] days' notice and not more than annually, examine Vendor's documentation regarding the data inputs, aggregation methodology, and output generation applicable to Subscriber, subject to reasonable confidentiality protections.

Antitrust indemnity. Vendor shall indemnify Subscriber against any claim alleging that the design or operation of the Product constitutes or facilitates an agreement in restraint of trade, excluding claims arising from Subscriber's own conduct outside the use of the Product as configured under this Agreement.

Termination and data. On termination, Vendor shall cease using Subscriber's contributed data in any product and shall certify deletion within [30] days.

Tool 3 — Data provenance register

Maintain one row per field. Review annually and on any feed change.

Source type taxonomy — every competitor-derived field must carry one:

• Public — published, posted, or publicly filed
• Customer — volunteered by a customer in a negotiation
• Pool — aggregated benchmark from a compliant exchange
• Scrape — collected from public pages
• Competitor — received from a competitor or its agent. Prohibited. Quarantine and escalate.
• Conduit — received via a shared consultant, association, or joint venture. Prohibited pending review.

Drafting note. The taxonomy is the whole point. A pricing database that cannot distinguish a customer-reported bid from a competitor-supplied one cannot be defended, because nobody can say what the model relied on.

Tool 4 — Information exchange protocol

For any benchmarking, association survey, or data pool the firm participates in.

Before joining:

• Purpose documented, and it is not pricing coordination
• Administered by an independent third party
• Data lagged at least 90 days
• Aggregated so no participant is identifiable
• At least five participants; none above ~25% of the aggregate
• Open to any industry participant on equal terms
• No pricing discussion at any associated meeting
• Legal reviewed and approved in writing

On an ongoing basis:

• Participant count and shares re-verified annually
• Outputs reviewed for inferential identifiability in thin segments
• Meeting agendas reviewed in advance by legal
• Attendance reported
• Any pricing discussion at a meeting: object, leave, document, report same day

Tool 5 — Human review reason codes

Every accepted or modified recommendation records one. All codes point inward, at the firm's own circumstances.

Prohibited as reasons: "market conditions," "competitor pricing," "the recommendation," "industry norms," "consistent with market."

Tiering:

• Within ±[5]% of the prior period price: reason code only
• Outside that band: reason code plus a one-line written note
• Above $[threshold] revenue impact, or above ±[15]%: second approver

Compensation rule: no acceptance-rate target may appear in any objective, scorecard, or incentive plan for any employee who reviews recommendations.

Tool 6 — Competitor contact report

Complete the same day. Send to legal. Retain.

COMPETITOR CONTACT REPORT

Date and time: ______ Location or channel: ______ Your name and role: ______ Competitor and individual (if known): ______ Others present: ______ What was said (their words as closely as you recall): ______ What you said and did: ______ Did you state that you could not discuss the topic? □ Yes □ No Did you leave the conversation or the room? □ Yes □ No Was anything recorded, exchanged, or provided? ______ Have you told anyone else? Who? ______ Has any information from this contact entered any system or model? □ Yes □ No

Instructions to staff, in eleven words: Say you cannot discuss it. Leave. Write it down. Report today.

Tool 7 — Document hygiene guidance

Give this to anyone writing a business case, board paper, or vendor evaluation.

Never write, and never say:

• "This works better when competitors use it."
• "The whole market benefits."
• "Pricing discipline," "rational pricing," "stop the race to the bottom."
• "Everyone is on the platform now."
• "We won't have to worry about [competitor] undercutting."
• Any estimate of market-wide price effects.
• Any statement about what a competitor will do.

Write instead:

• "Improves our forecast accuracy against our own demand."
• "Reduces the lag between an inventory signal and a price change."
• "Lets our revenue team spend time on the 5% of decisions that matter."
• "Reduces manual error in a 40,000-SKU catalogue."

The test: if the sentence would still be true and still be a reason to buy the product if the firm were the only company in the world using it, it is safe. If the value depends on what competitors do, do not write it — and reconsider the purchase.

Tool 8 — Adherence reporting template

Quarterly, to compliance. Three pages maximum.

Period: ______ Tool: ______ Business unit: ______

Recommendations received: ______ Accepted as issued: ______ (%) Modified: ______ (%) Declined: ______ (___%) Downward deviations (priced below recommendation): ______ Largest deviation, and reason code: ______ Reason code distribution: ______ Recommendations without a documented reason: ______ (target: zero) Any vendor contact regarding a declined recommendation? □ Yes □ No — describe: ______ Any acceptance-rate target communicated by anyone? □ Yes □ No Any change to the tool, feed, or configuration this period? ______ Escalations: ______

Threshold triggering legal review: acceptance above [90]% for two consecutive quarters, any vendor contact about a deviation, any undocumented decision above the materiality threshold, or any change of data inputs.

Tool 9 — Model documentation index

Maintain for every category 3 or 4 tool. This is what a regulator asks for first and what most firms cannot produce.

1. Purpose statement — what the model is for, in the firm's own terms
2. Objective function — what it maximizes, with the approval record
3. Input register — cross-reference to the data provenance register
4. Excluded inputs — what was deliberately not used, and why
5. Constraints — floors, caps, bands, with the business basis for each
6. Configuration decisions — every switchable feature, its setting, who decided, when
7. Output specification — what the model returns and at what granularity
8. Review workflow — who reviews, at what tier, with what authority
9. Test results — sensitivity, individualization, directionality, deviation response, historical replay
10. Change log — every model, feed, or configuration change with date and approver
11. Vendor documentation — questionnaire responses, contract, marketing materials received
12. Legal reviews — dates, scope, conclusions (held by counsel)

Tool 10 — Litigation hold scope

On receipt of a CID, subpoena, complaint, or credible threat:

Custodians: pricing and revenue management personnel; the executive sponsor of the tool; procurement personnel who negotiated it; data engineering personnel who built the feeds; anyone who attended a vendor user group; sales leadership in affected markets; the finance owner of pricing reporting.

Systems: email and chat for the above; the pricing system, including recommendation and decision logs; the data warehouse tables feeding the model; the CRM fields containing competitor information; the vendor portal, including any downloads; the contract repository; shared drives holding business cases and board materials.

Special items: model configuration history and change logs; vendor marketing materials, including presentations stored locally; user group agendas, attendee lists, and notes; the data provenance register; competitor contact reports; prior audit memoranda (privileged, but preserve).

Suspend: auto-deletion on email and chat; log rotation on pricing and recommendation systems; routine overwrite of model versions; the destruction schedule for the affected periods.

Tool 11 — First response to a CID

Days 1–3: litigation hold; identify the responding entity and the scope; calendar the return date; engage outside counsel; instruct that nobody contact any other recipient or the vendor about the demand.

Days 4–10: meet-and-confer to negotiate scope, custodians, date range, and search terms; obtain an extension in writing; begin custodian interviews with counsel.

Weeks 2–6: collection and processing; privilege protocol; an early substantive assessment of the five categories that will decide the matter — vendor communications, internal statements about competitors, acceptance rates, deviation history, and the pre-adoption counterfactual.

Throughout: decide early, with specialist advice, whether there is any conduct that implicates a leniency analysis. That decision cannot wait for the document review to finish.

Never: discuss the demand with any competitor or with the vendor's other customers. That conversation is itself an inter-firm communication about an antitrust investigation, and it has ended badly for firms that had no underlying liability.

Tool 12 — Board memorandum template

TO: Audit Committee FROM: General Counsel RE: Pricing tool review — [date]

What we use. [Tool], from [vendor], in [business units], since [date]. [One sentence on what it does.]

What we contribute. [Fields], at [lag], aggregated to [level]. [State plainly whether any of it is non-public.]

What comes back. [Benchmark or firm-specific recommendation.] [Whether competitor data is identifiable.]

Market context. [Number of participants and aggregate share in our principal markets.]

The legal question. Section 1 requires an agreement. The risk is not that we use software; it is whether the arrangement gives us or our competitors assurance about each other's pricing. [Two sentences on where we sit.]

What we found. [Three to five specific findings, factual, no doctrine.]

What we are doing. [Remediation items, each with an owner and a date.]

What we keep. [The commercial capability preserved — this is the paragraph that gets the plan approved.]

Exposure if we are wrong. Treble damages, joint and several liability without contribution, criminal exposure, parallel state and foreign proceedings, and the cost of defending a case we win.

Next review: [date].

Tool 13 — Clean team protocol for transaction diligence

Until closing, the parties are competitors. Diligence involving pricing data is an information exchange.

• Written protocol agreed before any exchange, signed by both parties
• Clean team named: outside counsel, outside economists, and a small number of employees with no pricing responsibility, each individually identified
• Clean team members sign undertakings not to disclose to commercially active personnel
• Competitively sensitive data — current prices, customer-specific terms, forward plans — goes only to the clean team
• Data provided to the deal team is aggregated and lagged
• No exchange of future pricing intentions in any form
• Synergy analysis conducted by the clean team; only aggregate conclusions reported out
• Integration planning does not extend to pricing decisions before closing
• Log maintained of what was exchanged, when, and to whom
• Protocol survives termination: if the deal fails, clean team materials are destroyed and the undertakings continue

Related documents

• Algorithmic pricing and antitrust: shared software, tacit collusion, and the new price-fixing cases
• Auditing a pricing algorithm for antitrust risk: a practical guide
• Algorithmic pricing compliance checklist
• Price discrimination toolkit: pricing audits, cost justification files, and meeting competition records
• Merger clearance checklist