Ariel Ezrachi and Maurice E. Stucke ‘Sustainable and Unchallenged Algorithmic Tacit Collusion’ Oxford Legal Studies Research Paper No. 16/2019

This piece is similar to last week’s papers in that if focuses on the challenges posed by algorithmic tacit collusion, but arguably goes further. In previous work, the authors outlined four scenarios where algorithms may be used to facilitate collusion. There is a consensus that their first two scenarios – Messenger, where algorithms help humans collude; and Hub and Spoke, where a common intermediary provides the algorithm and the pricing decision mechanism that could facilitate collusion – pose competition issues that should be addressed under existing rules. Their third and fourth scenarios have proved more controversial. Under the third scenario, called Tacit Collusion on Steroids – The Predictable Agent, companies could unilaterally use algorithms with the intent to facilitate conscious parallelism (also known as tacit collusion). Under the fourth scenario, called Artificial Intelligence, God View, and the Digital Eye, algorithms may arrive at this anticompetitive outcome on their own. Tacit collusion is beyond the reach of the competition laws of…

German Monopolies Commission ‘Algorithms and Collusion’, Chapter I of the XXII. Biennial Report

The Monopolies Commission is a permanent, independent expert committee which advises the German government and legislature as regards competition policy-making, competition law and regulation. The chapter is already one year old, and can be accessed here. In data-intensive sectors such of the digital economy, pricing algorithms can facilitate collusion by automating collusive behaviour. For example, algorithms can stabilise collusion by allowing the collection of information on competitors’ prices and sanctioning deviations from collusive market outcomes more quickly. The use of pricing algorithms can also render explicit anticompetitive agreements or concerted practices dispensable. As a result, difficulties with determining whether a concerted practice is actually taking place will increase with the use of pricing algorithms. The Monopolies Commission considers that the use of pricing algorithms makes it necessary to strengthen market monitoring through sector inquiries. Since consumer associations are most likely to have indications of collusive overpricing, the Monopolies Commission recommends that consumer associations obtain the right to initiate competition sector…

Emilio Calvano, Giacomo Calzolari, Vincenzo Denicol and Sergio Pastorello ‘Artificial Intelligence, Algorithmic Pricing and Collusion’ Centre for Economic Policy Research, London

Algorithmic pricing is not new, but newer software programs are much more “autonomous” than their precursors. Powered by Artificial Intelligence (AI), pricing algorithms can develop their pricing strategies from scratch, engaging in active experimentation and adapting to the evolving environment. In this learning process, they require little or no external guidance. Taken together with the diffusion and evolution of pricing algorithms, these developments raise various issues for competition policy, particularly as regards tacit collusion. While so far no one has brought an antitrust case against autonomously colluding algorithms, antitrust agencies are discussing the problem seriously. In addition to the OECD, competition authorities in the US, Canada and UK have held roundtable or issued papers on the topic. This paper, available here, tries to understand whether tacit collusion arising from AI should be a real concern by looking, for the first time, at the emergence of collusive strategies among autonomous pricing algorithms. It takes an experimental approach, by constructing AI pricing agents and…

Francisco Beneke and Mark-Oliver Mackenrodt ‘Artificial Intelligence and Collusion’ (2019) International Review of Intellectual Property and Competition Law 50 109

Current technological developments in the field of artificial intelligence (AI) have added further complexity to the discussion of whether, in the absence of overt communications, mere tacit coordination between competitors should be outlawed. Whereas some commentators argue that the dangers posed by AI should tip the balance towards making tacit coordination illegal, there are others who are either not entirely persuaded of the plausibility of such dangers or who point out that a competition rule focusing on mere inter-firm interdependence is not administrable. This paper, available here, reviews this debate with a view to establishing whether successful price coordination achieved by self-learning algorithms should be punishable under EU competition law, and whether the current regulatory framework is suitable. Section 2 explains how AI relates to antitrust. AI is expected to arise from certain types of software algorithms. An algorithm is merely a specified sequence of steps for producing a solution to a problem. Software is a composition of individual algorithms…