Competition

Algorithms and collusion: Competition policy in the digital age

 

Date of publication
14 September 2017

 

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13/09/2017 - The combination of big data with technologically advanced tools, such as pricing algorithms, is increasingly diffused in everyone’s life today. This is changing the competitive landscape in which many companies operate and the way in which they make commercial and strategic decisions.

While the size of this phenomenon is to a large extent unknown, a growing number of firms are using computer algorithms to improve their pricing models, customise services and predict market trends. This phenomenon is undoubtedly associated to significant efficiencies, which benefit firms as well as consumers in terms of new, better and more tailored products and services.

However, a widespread use of algorithms has also raised concerns of possible anti-competitive behaviour as they can make it easier for firms to achieve and sustain collusion without any formal agreement or human interaction. This paper focuses on the question of whether algorithms can make tacit collusion easier, both in oligopolistic markets and in markets which do not manifest the structural features usually associated with the risk of collusion.

This paper discusses some of the challenges algorithms present for both competition law enforcement and market regulation. In particular, the paper addresses the question of whether antitrust agencies should revise the traditional concepts of agreement and tacit collusion for antitrust purposes, and discusses how traditional antitrust tools might be used to tackle some forms of algorithmic collusion. Recognising the multiple risks of algorithms and machine learning for society, the paper also raises the question of whether there is need to regulate algorithms and the possible consequences that such a policy choice may have on competition and innovation.

 

PRESENTATION OF THE HIGHLIGHTS

 

DOCUMENTS AND LINKS

 

Algorithms and competition: Friends or foes? (2017)

Roundtable on algorithms and collusion (2017)

OECD Going Digital Project

OECD work on Digital Economy, Innovation and Competition

Big data: bringing competition to the digital era (2016)

Price discrimination (2016)

Oligopoly markets (2015)

The digital economy (2012)

Unilateral disclosure of information with anticompetitive effects (2012)

Price transparency (2001)

 

 

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