European Papers (Nov 2021)
The Misleading Consequences of Comparing Algorithmic and Tacit Collusion: Tackling Algorithmic Concerted Practices Under Art. 101 TFEU
Abstract
(Series Information) European Papers - A Journal on Law and Integration, 2021 6(2), 1193-1228 | Article | (Table of Contents) I. Preliminary remarks. - II. The increasing attractiveness of cartels in the age of big data analytics. - III. Collusion between rational algorithms: the relation between market transparency and artificial intelligence in a world of big data. - IV. Existing vs created market conditions: tacit collusion or algorithmic concerted practices? - V. The limited role played by intent and imputability in the antitrust realm: the case of parent company liability and its applicability by analogy to the relation undertakings vis-à-vis algorithms. - VI. Big data analytics does create competitive concerns: should the Commission and national competition authorities commit to tackling algorithmic collusion? - VII. Conclusions. | (Abstract) Due to digital markets' transparency, algorithmic collusion may occur even if algorithms are designed to maximize profits rather than to conspire. The literature suggests that competition rules may not cover algorithmic collusion, being the latter an example of tacit collusion: by monitoring market conditions, each algorithm unilaterally and rationally decides to maintain supra-competitive prices. Data analytics ease the monitoring and reaction to competitors' behaviours, increasing the number of markets subject to tacit collusion. Yet, intention to conspire seems absent. In this Article, it is submitted that algorithmic collusion is different from tacit collusion and can be tackled under EU competition law. In the traditional scenario, undertakings base their rational decisions on the existing markets conditions. While designing their algorithms to maximize profits, undertakings are contributing to create the conditions allowing "tacit" collusion to occur. Moreover, a quasi-strict liability regime applies to antitrust offences, so that intention and imputability play limited roles. As a consequence, if algorithms programmed to maximize profits end up colluding, a rebuttable presumption of the existence of a concerted practice should apply. The practice should be prohibited unless undertakings can prove that, in the specific case, a concerted practice did not occur or that art. 101(3) TFEU applies. Moreover, competition rules may be enforced even without ascertaining any antitrust infringement. Competitive concerns are enough to adopt commitment decisions. Here, the Commission (or a National Competition Authority) may negotiate with the concerned undertakings technical remedies to prevent algorithmic collusion by intervening on the way the algorithms work.
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