Last month, the French Competition Authority ("FCA") and the Bundeskartellamt ("BKA") published a joint study on algorithms and their potential implications from a competition law standpoint. This study presents the results of nearly a year and a half of collaborative work between the two authorities, by providing preliminary answers to the question as to whether algorithms may have detrimental effects on competition. It also constitutes an outline for companies to apprehend the algorithms they use and to ensure antitrust compliance (in particular when it comes to pricing algorithms). The study addresses two potential competitive risks when using algorithms:
Algorithms as a potential catalyst for collusion: the study examines three practical scenarios, allowing companies to identify situations where algorithms might be used to enhance collusion: (i) where an algorithm is used as a supporting/monitoring tool to enforce or strengthen an already existing “traditional” anticompetitive agreement; (ii) where an algorithm is provided by a third party to several competitors, as the similarities between the software services provided may lead in some cases to an alignment between competitors (e.g. pricing coordination); and (iii) where companies use distinct algorithms on their own, as successive interactions between such algorithms might facilitate an alignment of the companies' behaviour.
Algorithms as a potential source of market power: the study identifies interdependencies between algorithms and the market power of companies using them, which could lead to the creation of barriers to market entry (e.g. development costs, access to data to be processed by algorithms, etc.). Besides, an abusive behaviour might also result from a refusal to supply a competitor with essential information relating to algorithms, price discrimination through the use of pricing algorithms, or even self-preferencing practices through the use of ranking algorithms.
The study ultimately concludes that, as far as the current legal framework is concerned, no immediate changes are required to address algorithms-related competition issues for the moment. However, given the ever-changing nature of algorithms, in-depth exchange between regulators and digital stakeholders will be key to address these new issues in the future.