EU Competition Policy: Algorithmic Collusion in the Digital Single Market

E-commerce promises a digital environment with ‘more perfect’ market characteristics. Although consumers may benefit from digital efficiencies, firms’ exploitation of such benefits may require new policy to regulate in line with the European Commission’s Digital Single Market Strategy. Price-setting algorithms are central to this dichotomy, as faster and more transparent pricing strategies could conceivably maintain algorithmic price-fixing cartels – which Article 101 of the Treaty on the Functioning of the European Union may prove inadequate in tackling. This paper looks to remedy a perceived failure in the literature to appreciate the legal and economic analysis necessary to inform an alternative policy. It will assess the anti-competitive impact of pricing algorithms by contrasting the online and offline economic environments against which policy is set. It will evaluate the effectiveness of current policy in tackling explicit and tacit algorithmic collusion, accounting for its impact upon reasonable business practices, consumer welfare, liability and enforcement, and legal concepts which can be difficult to apply to the digital market. As long-term consumer welfare could be sacrificed by enforcing short-term remedies, it is advised that policy returns to its ordoliberal roots: prioritising the maintenance of healthy competition over current welfare-first economics which lack sufficient clarity to regulate algorithms.