The Applicability of Art. 101 TFEU to Horizontal Algorithmic Pricing Practices: Two Conceptual Frontiers

Abstract

As the use of pricing algorithms in electronic commerce has become ubiquitous, competition authorities have become alert to the potential anti-competitive outcomes that might arise from the use of such computerised tools by market players, particularly those who compete directly against each other in digital markets. This paper seeks to explore the extent to which existing European competition law principles are applicable to market players who pursue algorithmic pricing strategies to achieve sub-competitive parallel pricing outcomes, diminishing the degree of price competition that might otherwise exist between them. In particular, we will focus on situations where no agreement exists between the market players, starting from the premise that their actions are non-collusive in the sense that they are not implementing some sort of cartel arrangement via electronic means. The interesting legal question which emerges is whether, in the absence of a specific anti-competitive agreement, plan or scheme that has been concluded between competing undertakings, an infringement of the existing competition law rules can nevertheless be established against those whose deliberate algorithmic pricing activities produce stifling effects on price competition in online marketplaces, resulting in harms to competition similar to what they would have achieved had they actually reached such an agreement beforehand. Two conceptual frontiers will be scrutinised in greater detail: (1) whether or not the concept of a “concerted practice” can be applied to such algorithmic pricing conduct; and (2) whether or not a credible theory of competitive harm can be constructed in such scenarios.