Collusion between price-bots
20 Nov 2017
As our local regulator, the FMA, looks at allowing Robo-advice in New Zealand the Australian Competition and Consumer Commission (ACCC) warns of collusion between robots.
Big Data can produce major benefits for consumers but also creates opportunities for collusion, the ACCC says.
Chairman Rod Sims believes data-driven innovation can help develop efficient solutions to everyday problems.
“However, these developments clearly have many consequences for markets, and the ACCC is considering cases where algorithms are deployed as a tool to facilitate conduct that may contravene Australian competition law,” he said in a speech in Sydney.
The ACCC has a Data Analytics Unit, which is deployed in a number of market studies and supports the work of investigations teams.
“Some argue that, in the right market conditions, pricing algorithms may be used to more effectively engage in and sustain collusion, whether ‘tacit’ or not, reducing competition but without contravening competition laws,” Mr Sims said.
“It is said that a profit-maximising algorithm will work out the oligopolistic pricing game and, being logical and less prone to flights of fancy, stick to it. To further complicate matters, the development of deep learning and artificial intelligence may mean companies will not necessarily know how, or why, a machine came to a particular conclusion.
“To this end, it is argued that if similar algorithms are deployed by competing companies, an anti-competitive equilibrium may be achieved without contravening competition laws.”
In response to businesses that think algorithmic collusion is a “get out of jail free card”, Mr Sims said: “You cannot avoid liability by saying, ‘My robot did it.’ ”