In CADE’s sight: algorithmic collusion

In CADE’s sight: algorithmic collusion

In the last few days, CADE representatives participated in an event held in Paris to discuss Competition Advocacy. The Brazilian antitrust authority was represented by CADE’s President Alexandre Cordeiro, Commissioner Victor Oliveira Fernandes, and Alden Caribé (from CADE’s General Superintendence).

The discussions took place at the Competition Committee of the Organization for Economic Cooperation and Development (OECD). The Committee is responsible for promoting regular exchanges of views and analysis on competition policy issues. All materials related to these discussions, including country submissions, invited experts, and presentations, are published in the Best Practice Roundtables on Competition Policy series.

Among the topics addressed at the meetings over the past few days were (i) the future of leniency programs and cartel detection and deterrence; (ii) the relationship between competition and innovation; (iii) algorithmic competition; (iv) advantages and disadvantages of the Consumer Welfare Standard; (v) competition in the circular economy; and (v) damage theories for mergers in digital markets.

In its turn, the Brazilian delegation addressed issues related to algorithmic collusion. On this topic, CADE stated before other foreign antitrust authorities that framing algorithmic competition issues under traditional theories of harm is less challenging than finding evidence of algorithmic antitrust violations or devising strategies to avoid them, especially as technology continues to evolve rapidly and algorithms have been increasingly used by companies in various markets and segments, consequently impacting the way these companies operate.

As an example, a case involving airlines was cited in which the Brazilian authority investigated possible anticompetitive conduct arising from the use of pricing algorithms. Although, at the time, CADE dismissed the investigation on the grounds that the so-called “tacit collusion” arising from the use of technologies could not be punished, in this last event, the Brazilian antitrust authority has signaled to its peers that its understanding may soon change, considering the new challenges imposed by the use of algorithms in the business environment.

The appropriate form of antitrust enforcement is being widely discussed in Europe and the United States (by experts such as Schuwalbe, Ezrachi and Stucke), but in Brazil the discussion still seems to be in the early stages. However, it would not be a surprise to see a growth in the number of opened investigations in markets that adopt such technological solution.

The event organized by OECD lasted from June 12 to 16, and the results of the main topics covered can be found here.