On 19 February 2020, the Spanish competition authority (the "CNMC") formally opened proceedings against a major Spanish company, Idealista and other 6 firms for alleged anticompetitive agreements for coordination of prices and other commercial conditions in the real estate intermediation market.
The CNMC considers that coordination would have been implemented through the use of software and digital platforms, causing an increase in the housing prices. In fact, the CNMC affirms that this conduct would have been facilitated by firms specialized in IT solutions through the design of a real estate management software and embedded algorithms.
Idealista has denied its participation in the practices under investigation and has declared that it has never altered the prices of the properties advertised on its platform. The company has also clarified that it is the advertising clients who decide the conditions of their properties offered without any algorithm modifying the price.
In case that the CNMC's concerns are confirmed at the end of the investigation, this case would support the view that the increasing use of algorithms may affect competition in digital markets. There are no doubts that algorithms are playing an increasingly important role in emerging digital markets, by forecasting or even making business decisions. However, despite their advantages, such as cost reduction or ease of use, they can facilitate agreements between competitors on automated pricing.
In Spain this represents a new issue, since this is the first time that the CNMC initiates an antitrust investigation for a potential anticompetitive use of algorithms. By contrast, in other countries, including the UK or the USA, sanctions have already been imposed for the use of algorithms as a tool of repricing the products sold and distributed via online platforms.
On the basis of the above, similar cases will foreseeably be under review by the competition authorities in the near future, which will oblige them to reinforce their specialization in the technological field to determine liability of both the suppliers of the software and the companies using them for the coordination and alteration of prices.
For more information, please find the CNMC's official press release here.