Concern over collusion through algorithms raised by EU competition regulator

Margrethe Vestager outlined how the use of algorithms could infringe competition laws at a conference in Germany earlier this week. She said algorithms could be intentionally used to engage in price-fixing or retail price maintenance in breach of EU competition rules. However, she also specifically warned that businesses may be deemed to be acting in collusion as a result of the way their algorithms operate and should take steps to ensure automated systems are designed in a way to prevent collusion with other such systems.

"It's true that the idea of automated systems getting together and reaching a meeting of minds is still science fiction," Vestager said. "But illegal collusion isn't always put together in back rooms. There are many ways that collusion can happen, and some of them are well within the capacity of automated systems."

"As competition enforcers, I think we need to make it very clear that companies can’t escape responsibility for collusion by hiding behind a computer program," she said.

Businesses can look to principles enshrined in new EU data protection laws for guidance when considering the use of automated systems, Vestager said.

"The concept of 'data protection by design' makes clear that people’s privacy can never be an afterthought," Vestager said. "It has to be built into the way that services work from the very start. That's also how businesses need to think when they design and use algorithms."

"They may not always know exactly how an automated system will use its algorithms to take decisions. What businesses can – and must – do is to ensure antitrust compliance by design. That means pricing algorithms need to be built in a way that doesn't allow them to collude," she said.