LEGAL PRACTICE: ANTICOMPETITIVE PRACTICES - COLLUSION - PRICE FIXING - OUTSOURCED ALGORITHM - LIABILITY

Liability for outsourced algorithmic collusion: A practical approximation

KEYWORDS

Pricing algorithms have been one of the hottest topics in the European competition law community in recent years. While the discussion is mostly focusing on long term scenarios, this article aims to meet a more modest, yet in our view highly practically relevant, objective: The assessment of potential EU competition law risks and the allocation of liability in topical scenarios of algorithmic collusion, in particular relating to outsourced algorithms. We identify and analyse three different scenarios in which outsourced algorithms may violate EU competition law. The analysis shows that that the key element distinguishing the three scenarios is the authorship over the decision to use the pricing algorithm in an anticompetitive way. This differentiation is also crucial for determining the liability of the software user and/or the software developer.

I. Introduction 1. Pricing algorithms have been one of the hottest topics in the European competition law community in recent years. Largely pioneered by the research of Ariel Ezrachi and Maurice E. Stucke , [1] much has already been written about the potential anticompetitive effects of pricing algorithms. [2] 2. While actual enforcement is still relatively rare, competition agencies across Europe have turned their attention to the issue of algorithmic collusion, in particular over the past year. In July 2018, the German Monopolies Commission (“Monopolies Commission”), an advisory board to the German Federal Government, devoted an entire chapter of its 22nd Biannual Report to the question of whether, and to which extent, the use of pricing algorithms may enable or even facilitate

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