Some Reflections on Algorithms, Tacit Collusion, and the Regulatory Framework

By John Moore, Etienne Pfister & Henri Piffaut

Whether algorithms do increase the risk of tacit collusion remains very uncertain. Yet, if this is the case, the consequences for the effectiveness of regulation and of competition policy could be important and regulators need to think on how to make sure that this risk of algorithmic collusion is reduced while simultaneously preserving firms’ incentives to adopt such efficiency-enhancing mechanisms. This article reviews the latest experimental evidence of algorithmic collusion and its limitations. It then analyses some of the various solutions brought forward to adapt competition policy in order to tackle the issue of algorithmic tacit collusion, with a particular focus on possible complementarities between regulatory tools and competition enforcement.

By John Moore, Etienne Pfister, & Henri Piffaut¹

I. INTRODUCTION

A series of influential academic studies have highlighted the risk that algorithms may facilitate tacit collusion.² That has led to a growing interest among competition authorities and practitioners. Indeed, over the last couple of years, the UK, the French and German, and the Portuguese competition authorities have all published reports addressing this particular issue.³ However, to the best of our knowledge, there is yet to be a case of purely algorithmic tacit collusion sanctioned by a European competition authority.

This notable absence of cases could be due to several, non-mutually exc