Tacit algorithmic collusion

Domenico M Callipo

Most world trade takes place on digital markets. The unstoppable spread of the internet combined with constant technological development has given rise to what economists call the "new economy". Competition law plays a key role in regulating markets, as it prevents and punishes anti-competitive practices or the abuse of dominant positions, which damage competition and thus the whole market. Competition authorities have not always been able to effectively prevent and sanction challenges arising from competition abuses in digital markets. The new forms of abuses or anti-competitive practices that can be perpetrated through technological tools suggest that current tools to punish anti-competitive conducts may not be well suited to deal with the challenges of ever-changing markets. Thus, competition authorities need to equip themselves with new means to combat new form of abuses. In recent years, the European Union (EU) and its institutions have begun to question what a reasonable solution to effectively regulate competition in digital markets might be based on an increasing number of cases. One of the most problematic cases to be identified and sanctioned is that of tacit collusion implemented by the use of algorithms, a conduct capable of generating distortive effects on competition. The purpose of this article is to discuss the development of tacit algorithmic collusion, its difficult legal qualification, and the need to introduce new tools to correct these abuses.