Algorithms and Collusion: Bridging the Gap with Alternative Tools Algorithms and Collusion: Bridging the Gap with Alternative Tools

• Published in: GRURRR. Gewerblicher Rechtsschutz und Urheberrecht, Rechtsprechungs-Report/GRUR-DVD/GRUR-CD/IIC/Gewerblicher Rechtsschutz und Urheberrecht/Gewerblicher Rechtsschutz und Urheberrecht. Internationaler Teil Vol. 56; no. 3; pp. 463 - 469
• Main Author: Mikroulea, Alexandra P.
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01.03.2025; Springer Nature B.V
• Subjects: Editorial; Intellectual Property; IT Law; Law; Law and Criminolgy; Media Law
• ISSN: 0018-9855; 0016-9420; 0435-8600; 2195-0237; 2195-0237
• DOI: 10.1007/s40319-025-01578-5

In the digital economy, algorithms have transformed business operations, enabling firms to optimize pricing strategies, streamline supply chains, and enhance consumer experiences.1 However, their growing influence raises pressing concerns from a competition law perspective, particularly when algorithms are used to set key market parameters such as pricing.2 To fully grasp the competitive risks posed by algorithms, it is essential to first understand their nature and function, particularly in the context of advanced technologies such as AI.3 At its core, an algorithm is a structured sequence of operations executed in a precise order to achieve a specific objective.4 While this definition seems neutral, its application in market environments can lead to unintended – and sometimes anti-competitive – outcomes.5 Algorithms vary in function, from price-setting mechanisms that dynamically adjust costs to monitoring and ranking systems that influence market visibility. [...]in the Digital Eye Scenario, algorithms autonomously optimize prices, leading to unintended collusion without human intent or involvement.7 Key factors include automated pricing systems enhancing coordination, shared algorithmic systems facilitating collusion, and self-learning algorithms that may autonomously develop tacit collusion strategies.8 While explicit collusion is prohibited under current competition law, tacit collusion – where firms align their strategies without direct communication – remains largely unregulated, creating a significant legislative gap.9 This gap is increasingly exploited in the digital age, where algorithms enable coordination that mimics collusion but operates in a legal gray zone.10 From a competition law perspective, collusion arises when firms coordinate their actions to sustain supra-competitive prices, ultimately harming consumer welfare. The CMA triggers market investigations when it suspects significant harm to consumers through higher prices, reduced quality, or less innovation, but will refrain if the effects are deemed insignificant or the process would impose disproportionate costs.20 Besides the UK, Greece, among other countries,21 also has a similar tool to regulate sectors where effective competition is lacking and traditional competition law is inadequate.22 This multi-stage process involves consultation and publicity requirements, culminating in a reasoned decision that imposes necessary and proportionate regulatory measures to promote competition. [...]it empowers regulators to work with firms to design and implement tailored remedies.