Update on Artificial Intelligence and Competition Law

02 December 2019 | blog austria

On 6 November 2019, the German Cartel Office and the French Competition Authority published a joint report on the competition risks resulting from the use of algorithms (the "Report"). The Report tackles four main issues:

First, it explains that algorithms can be used as "facilitators" in "traditional" horizontal collusion. In such scenarios, the involvement of an algorithm to execute, for example, an agreement to keep prices at artificially high levels by itself does not raise competition concerns, but may be useful to investigate to identify potential counteracting efficiencies or the negative effects of the practice.

Second, the Report explores collusion between competitors involving a third party, e.g. where an external consultant provides the same algorithm or coordinated algorithms to competitors. Alignment is possible at the level of the algorithm or at the level of the input factors. The critical question for the finding of collusion is whether the competitors are aware of the third party's anticompetitive acts or could have foreseen them

Third, the Report elaborates on aspects such as self-learning algorithms and explains several ways in which an algorithm can establish interaction that may cause horizontal collusion. The report flags two significant questions in this regard: how to draw the line between impermissible collusive behaviour and permissible parallel conduct, and how to allocate possible collusion to the companies involved. Ideas in this regard range from applying a reasonable standard of care to an analogy to the concept of responsibility for the employees' actions or a combination of both

And fourth, the Report discusses the practical challenges of investigating algorithms. Guidance is given as to what evidence can be used and how it should be analysed, how to understand the role and context of the algorithms and how they are functioning.

The Report stresses that current antitrust rules are flexible enough to deal with most competition law problems created by the use of algorithms. There is uncertainty, however, as to whether future developments in digitalisation will necessitate broadening the extent of the cartel prohibition. This notwithstanding, the Report encourages competition authorities to stay on top of technological developments and keep improving their expertise on algorithms.

 

 

Christoph Haid

Partner

T: +43 1 534 37 50119
c.haid@schoenherr.eu

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