Pricing algorithms applications: implications for vertical and horizontal agreements and compatibility with EU competition law

Abstract

In 2017, the European Commission published a final report on the sector inquiry carried out in the E-commerce sector. The Staff Working Document accompanying the report reflected that 53% of the respondent retailers to the inquiry tracked online prices of competitors, out of which 67% used automatic software programmed to achieve more efficient price tracking. 78% of the retailers that used software price tracking adjusted their own prices to those of their competitors. While algorithm-enabled price tracking is considered to be legal under EU competition law, some scholars have shown opposition to its effects on competition. Also, even though software intervention in price determination can be lawful, there are still situations which are deemed to be illegal. Under EU competition law, a number of potential implications arising from pricing algorithms can be analysed from both a vertical and horizontal perspective, with particular focus on algorithmic tacit coordination.