Technology works both ways when it comes to anti-competitive behaviours

"In general, we are seeing less enforcement by authorities in the cartel space. Whilst this may in part be due to companies being less inclined to apply for leniency – to avoid having to deal with burdensome inconsistent approaches between jurisdictions and the risk of follow-on damages claims – in our experience a key factor is that more businesses have effective compliance policies in place which mean they are catching any potential cartel behaviour at an earlier stage. These policies are important and clients are reminded of the importance of having – and properly implementing – a focussed antitrust compliance programme.”

- Doug Tween

As many businesses are finding across almost all industries and sectors, new technology in various manifestations can serve them very well. Put another way, those businesses that do not harness the potential for new technology are being left behind. Competition agencies are struggling to keep pace with changing markets, let alone the various applications to which technology is being put, when considering the impact on competition between companies and the protection of consumers.

Just to take a few examples: Blockchain technology, which enables direct peer-to-peer transactions to be securely recorded online, may give rise to shared price or cost information between participants who are also competitors or potential competitors. Data analytics is becoming an important source of competitive advantage for individual companies, but sharing Big Data is open to the charge of collusion. More broadly, the Internet of Things, involving links between multiple devices and therefore by definition aggregating data, is yet another area where competition authorities are struggling to keep pace with changing markets.

At issue is whether the existing regulatory frameworks are sufficient to identify and control cartels, and whether regulations need adapting. There is a difference in approach between the U.S., where broadly the authorities believe they have the right regulatory tools, and Europe, where the emerging consensus is that additional / revised rules are required – but these are topics that are being actively considered in most key jurisdictions. In addition to the intense focus on platforms (discussed in the next section of this Outlook piece), agencies in many countries are focussing on the role of Algorithms, examining whether and in which circumstances their use can make it easier for firms to achieve and sustain collusion without any formal agreement or human interaction. In the UK, the Competition & Markets Authority recently conducted a study into pricing algorithms and it has now set up a data science unit to expand its expertise in the digital sector.

Not that all agencies are bewildered by the new technology. Some are themselves harnessing technology to search out potential cartels, including the use of “screens”, an automated detection method that uses large amounts of data to detect cartel behaviour, forensic IT and AI.