Algorithmic Pricing - A Competition Law Perspective on Personalised Prices

Abstract

In the age of big data, sellers can amass a considerable amount of up-to-date information about their customers that algorithms can then use in order to engage in personalised pricing practices at a large scale. From a competition law perspective, several questions arise in this context. The prospect of an increased personalisation of prices may lead to a gradual disappearance of uniform market prices, which have been at the centre of economics-based competition law for many years. This could call into question many of the general tools of competition analysis. Furthermore, the question poses itself to what extent algorithmic personalised pricing could constitute an anti-competitive practice that can and should be challenged under current competition laws. While some theories of harm, like discrimination and excessive prices, are possible candidates when analysing the applicability of well-known abuses to algorithmic personalised pricing, consumer trust in digitalisation and markets may warrant the elaboration of a theory of harm specifically tailored to algorithmic personalised pricing. In addition, the question poses itself whether the particular harm that algorithmic personalised pricing can inflict should be considered in more tailored regulation. While this contribution’s focus is on EU competition law, similar principles can guide the discussion in other jurisdictions.

Keywords: abuse of dominance; algorithmic pricing; economics in antitrust; market dominance; personalised pricing; price discrimination; theories of harm