Price setting algorithms and collusion: An Australian perspective

Arihant Agarwal

Competition and Consumer Law Journal

Arihant Agarwal, ‘Price setting algorithms and collusion: An Australian perspective’ (2021) 28 CCLJ 316

Abstract

Today, multiple businesses are adopting and integrating price-setting algorithms or pricing algorithms into their businesses to aide them in reaching the perfect pricing points that will maximise profits. With the advent of artificial intelligence and machine learning, the real-time calculations provided by pricing algorithms are no longer second guessed by businesses before adoption. However, these pricing algorithms that are powered by artificial intelligence and machine learning and ones wherein human are not actively or intentionally colluding provide challenges to the current competition law regime. The effect of business’ usage of pricing algorithms feels anti-competitive even though there might be a lack of collusive intention on part of the businesses. This article explores the anticompetitive effects of price-setting algorithms, specifically to horizontal agreements under pt IV of the Competition and Consumer Act 2010 (Cth). It argues that the anticompetitive effects of pricing algorithms fall in the grey area between conscious parallelism and concerted practices or cartel-like behaviour, and the provisions of pt IV of the Act are insufficient in their current form to deal with this challenge.