In an interesting speech on Innovation, Chairman of the CMA David Currie raises the question of whether algorithms can cause competition problems.
He comments that 'machine learning means that the algorithms may themselves learn that co-ordination is the best way to maximise longer-term business objectives' and questions whether a failure to build in adequate constraints to prevent an algorithm learning this could breach competition law.
His comments come a day after the European Commission launched a probe into resale price maintenance between suppliers and online retailers of consumer electronics, the effect of which the Commission says may have been 'aggravated due to the use by many online retailers of pricing software that automatically adapts retail prices to those of leading competitors'.
It will be interesting to see how the competition authorities approach these new tools, and whether they can do so in a way that doesn't stifle innovation.
Could a unilateral decision by an online retailer to use e.g. automated repricing software really be problematic? What if the use of such tools becomes common practice in a given sector?
In fact they could face scrutiny - and their use could be prohibited or regulated - even if they don't infringe competition law. As Mr Currie notes, the UK has a powerful markets regime, which allows the CMA to investigate whether competition in a market is working effectively - and which gives the CMA extensive powers to impose remedies without needing to find any infringement of competition law. The CMA is currently using the markets regime to look at digital comparison tools. Will algorithms such as automated repricing software be next?
Does the law stretch to cover sins of omission as well as sins of commission: the failure to build in sufficient constraints on algorithmic behaviour to ensure that the algorithm does not learn to adopt anti-competitive outcomes?