# The Algorithm Running Up French Fry Prices

Channel: Half as Interesting
Source: https://www.youtube.com/watch?v=Z8-wqv9_-Ac
Recap page: https://rapidrecap.app/video/Z8-wqv9_-Ac
Generated: 2025-07-10T04:39:06.788+00:00

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## Quick Overview

The price of McDonald's fries increased 138% in 10 years, not due to inflation, but an alleged "potato cartel" using algorithmic price fixing via a program called "PotatoTrac" to coordinate price increases among major frozen potato producers like Lamb Weston, McCain Foods, Simplot, and Cavendish Farms, controlling 97% of the market. This practice, also seen in other industries like rental housing with "RealPage," allows companies to fix prices without direct collusion, leading to higher consumer costs.

## Summary

**Key Points:**
- McDonald's medium fries increased 138% in price over the last decade, with a 47% rise in just the last two years (July 2022-July 2024).
- This price surge is attributed to an alleged "potato cartel" rather than general inflation.
- The "potato cartel" consists of four major frozen potato processors: Lamb Weston (40%), McCain Foods (30%), J.R. Simplot Co. (20%), and Cavendish Farms (7%), collectively controlling 97% of the market.
- These companies allegedly engage in "algorithmic price fixing" using a third-party program called "PotatoTrac."
- "PotatoTrac" aggregates commercially sensitive data (supply cost, sales figures, marketing details) from all four companies and provides identical pricing advice, allowing them to coordinate price increases without direct communication.
- This practice has led to synchronized price hikes across the industry, with no company attempting to undercut another.
- Similar algorithmic price-fixing schemes are being investigated or sued in other industries, including meat, sugar, ride-sharing, airlines, hotels, insurance, and rental housing (e.g., RealPage).

![Screenshot at 0:03: Graph showing McDonald's fry price increase over time](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-00-03.png)

**Context:** The video investigates the significant increase in French fry prices, arguing it's not solely due to inflation but rather a sophisticated form of price manipulation. It draws parallels to historical monopolies like Standard Oil and explains how cartels operate to fix prices. The core of the argument centers on a modern, algorithm-driven method of price fixing that allows major companies to coordinate without direct illegal collusion, impacting various consumer goods and services beyond just French fries.

## Detailed Analysis

The video asserts that the dramatic 138% increase in McDonald's medium fry prices over the past decade, including a 47% surge between July 2022 and July 2024, is not a result of typical inflation but an alleged "criminal enterprise" by a "French fry cartel." This cartel comprises four dominant frozen potato processors: Lamb Weston (40% market share), McCain Foods (30%), J.R. Simplot Co. (20%), and Cavendish Farms (7%), which collectively control approximately 97% of the global frozen potato market. The video explains that while traditional monopolies and cartels are illegal, these companies allegedly engage in "algorithmic price fixing" through a third-party data aggregation service called "PotatoTrac." Each cartel member feeds their commercially sensitive data, such as supply costs, sales figures, and marketing details, into "PotatoTrac." The program then processes this information and provides identical pricing recommendations to all participating companies, effectively allowing them to coordinate price increases without direct communication or explicit agreements. This coordinated behavior is evidenced by synchronized price hikes across all four companies over several years, with no company attempting to undercut the others. The video highlights that this sophisticated form of price fixing is not limited to the potato industry but is also being used and investigated in other sectors, including meat, sugar, ride-sharing, airlines, hotels, insurance, and notably, the rental housing market through a similar platform called "RealPage," which is currently facing a lawsuit from the Justice Department for its alleged algorithmic pricing scheme that harms millions of renters. This demonstrates a broader trend where data and algorithms are used to manipulate markets and maintain artificially high prices, circumventing traditional antitrust laws.

### French Fry Price Surge

- McDonald's medium fries increased 138% in price over the last decade, with a 47% rise in just the last two years (July 2022-July 2024)
- This increase is not due to inflation but an alleged "conspiracy" or "criminal enterprise" by a "French fry cartel."

### Monopolies and Cartels

- Standard Oil controlled 88% of refined oil in the US in the 19th century, leading to anti-monopoly laws
- Monopolies are illegal to promote competition and reasonable prices
- Cartels are formed when businesses agree not to compete, fixing prices to their advantage.

### Historical Cartel Examples

- The Phoebus Cartel made light bulbs worse and shorter-lasting
- European elevator companies (Kone, Otis, Thyssenkrupp, Schindler) operated a cartel for a decade
- Quebec's maple syrup and Swiss cheese industries were also controlled by cartels.

### The Alleged Potato Cartel

- Composed of Lamb Weston (40%), McCain Foods (30%), J.R. Simplot Co. (20%), and Cavendish Farms (7%)
- These four companies control about 97% of all frozen potatoes globally.

### Algorithmic Price Fixing Explained

- The companies use a third-party program called "PotatoTrac" (Circana, LLC)
- PotatoTrac aggregates commercially sensitive data (supply cost, sales figures, marketing details) from all members
- It then provides identical pricing advice to all companies, allowing coordinated price increases without direct collusion.

### Evidence of Coordination

- Price increases by one company are immediately mirrored by others
- This pattern of synchronized price hikes occurred repeatedly from February 2021 through July 2024
- No company attempted to undercut competitors, leading to skyrocketing frozen potato prices and increased profits.

### Broader Impact of Algorithmic Price Fixing

- This practice extends beyond French fries to industries like meat, sugar, ride-sharing (Uber), airlines (ATPCO), hotels, and insurance
- RealPage is a similar algorithmic pricing platform used by landlords, currently facing a Justice Department lawsuit for harming millions of renters by fixing rental prices.

![Screenshot at 0:00: Person with "H" logo head next to fries with $3.79 price](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-00-00.png)
![Screenshot at 0:03: Graph showing McDonald's fry price increase over time](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-00-03.png)
![Screenshot at 0:22: Person holding a long grocery receipt in a supermarket](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-00-22.png)
![Screenshot at 0:48: Legal document for a class action complaint against potato companies](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-00-48.png)
![Screenshot at 1:51: Animated bakery shops with bread prices changing due to cartel](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-01-51.png)
![Screenshot at 2:24: Lightbulb with Philips, Osram, Phoebus Cartel, GE logos](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-02-24.png)
![Screenshot at 3:15: Infographic showing market share of four potato companies](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-03-15.png)
![Screenshot at 3:24: Graph showing synchronized price increases by potato companies](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-03-24.png)
![Screenshot at 4:14: Text overlay "ALGORITHMIC PRICE FIXING" over market stalls](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-04-14.png)
![Screenshot at 4:36: Diagram showing four potato companies feeding data into PotatoTrac](https://ss.rapidrecap.app/screens/Z8-wqv9_-Ac/00-04-36.png)