Antitrust & Competition: Potential Risks Arising From Use of Algorithmic Pricing Tools

05 Jun 2023 LegisWatch

The use of pricing algorithms has become more pervasive in recent years as they provide businesses with the automated means of monitoring and responding competitively to changes in market pricing. Advancements in artificial intelligence and machine learning, and in some cases the availability of large data sets on consumer behaviour, further enhance the effectiveness of such tools.

Such algorithms can however raise antitrust related risks, as their deployment can involve the exchange of commercially sensitive information or implementation of uniform pricing behaviour. They may even be used as tools to enforce collusive arrangements between competitors. While the behaviour and decisions taken by the algorithms are automatically effected and not specifically directed by a human actor, the responsibility for any antitrust infringements rests solely on the business which deployed the algorithm.

Given that these technologies can have potentially adverse effects on the competitive dynamics of the markets where they are deployed, it is not surprising that competition regulators have shown keen interest as well. For example, the Competition and Consumer Commission of Singapore’s 2020 market study on e-commerce platforms included a section which considered the potential anti-competitive impact of pricing algorithms, and specifically warned businesses to be alert to competition law risks, and to ensure competition law compliance, when designing or deploying algorithms.

This update takes a look at common issues that arise in connection with the deployment of such algorithmic tools, the attitude of competition regulators towards the usage of such tools and what businesses which deploy such algorithms should do to address the antitrust risks that may arise.

If you would like information or assistance on the above or any other area of law, you may wish to contact the Partner at WongPartnership whom you normally work with or any of the following Partners:

Head – Antitrust & Competition
d +65 6416 8113
Click here to view Ameera’s CV.

CHAN Jia Hui
Partner – Antitrust & Competition
d +65 6416 2794
Click here to view Jia Hui’s CV.