Competition (Law) in the Era of Algorithms

Abstract

Algorithm-driven computer programs have become key instruments for market success in a digitalized economy. They can generate positive effects on consumer welfare and welfare in general. On the other hand, algorithms may foster tacit collusion, adversely affect consumer choice, even pose a threat to pluralism. Especially since algo-driven market interactions call traditional economic models into question, it is still unclear whether and how the new challenges can be addressed within the existing framework of (competition) law or whether new legal tools, such as algorithm-focused regulation, must be developed. To approach these questions, the Center for Intellectual Property and Competition Law (CIPCO) at the University of Zurich held a workshop in February 2018. The first part of the workshop focused on technical and economic fundamentals, the second on effects on consumers, and the third part on the existing case-law, as well as on the practice and policy of competition agencies. The present paper reflects the discussions and results of the workshop.

Keywords: Algorithm, algorithmic consumer, tacit collusion, explicit collusion, Lufthansa, Uber, Kalanick, Eturas, CIPCO, Topkins, price discrimination, digital butlers, concerted practices, collusive equilibrium, deep learning