[THE COMPETITIVE CHALLENGES OF ALGORITHMIC PRICING]

[BUSINESS LAW - COMPETITION - CONSUMER LAW - ARTIFICIAL INTELLIGENCE - DIGITAL LAW]

🚨The rise of algorithms in commercial decision-making is raising competition law concerns. With the rise of e-commerce and digital platforms, these tools are increasingly used in a variety of industries and sectors, from entertainment to healthcare, among others.

⚖️An algorithm is a "list set of instructions, used to solve problems or perform tasks, based on the understanding of available alternatives".

For example, they can be used for decision support, matching, information retrieval, prediction and important business strategies.

Pricing algorithms are not inherently anti-competitive.

However, the use of these algorithms to determine selling prices or allocate markets raises competition concerns (in particular collusion), requiring increased vigilance in terms of compliance, both by the competition authorities and by the operators using these intelligent solutions.

Research is being conducted on the ability of algorithms to coordinate high prices without direct communication.

In the United States

According to the U.S. Department of Justice (‘DOJ’) and the U.S. Federal Trade Commission (‘FTC’), emerging automated systems deserve special scrutiny for their impacts on civil rights, fair competition, consumer protection and equal opportunity.

In United States v. Topkins, No. 15-201 (N.D. Cal. Apr. 30, 2015) [ECF No. 7], Topkins sold wall posters on Amazon's Marketplace and colluded with its competitors to price certain posters at a certain price determined by pricing algorithms programmed for that purpose. The AI was found to be used as a tool to implement anti-competitive price fixing practices.

On 2 February 2023, Senior Assistant Attorney General Doha Mekki of the DOJ's Antitrust Division warns of the risks associated with algorithms, particularly in healthcare.

On 26 September 2024, the FTC filed a complaint against Amazon for abuse of dominant position. More specifically, the FTC accused Amazon for adopting ‘anticompetitive and unfair strategies to illegally maintain its monopoly’ on online commerce, in particular with regard to the use of a secret price prediction algorithm to increase the price of certain products (‘Project Nessie’).

In Europe

On 6 November 2019, the French Competition Authority (‘ADLC’) and the German Federal Cartel Office (‘Bundeskartellamt’) published a joint study entitled ‘Algorithms and Competition’ dealing with the subject of competitive risks associated with algorithms.

On 11 May 2021, the French ADLC and the Pôle d'Expertise de la Régulation Numérique (PEReN) signed a cooperation agreement on the analysis of data, source codes, computer programmes, algorithmic processing and the audit of algorithms.

In Decision 23-D-04 of 12 April 2023, several companies in the Bureau van Dijk (‘BvD’) group and Ellisphere were fined 3 500 000 € by the ADLC under the leniency procedure resulting from Law 2020-1508 of 3 December 2020, known as the ‘DDADUE Law’. In this case, the alleged facts concerned price-fixing and customer allocation cartels, that lasted for more than 30 years, on the basis of Article L. 420-1 of the French Commercial Code and Article 101(1) of the Treaty on the Functioning of the European Union (‘TFEU’).

#IA #AI #competition #antitrust #agreement #collusion #digital