7. A solution in sight? Tackling the challenges presented by algorithmic tacit collusion
7.1. The necessity of combining regulatory and competition law remedies
39 Court establishes that the EU competition law rules remain applicable even in regulated markets and undertakings can be held liable for anticompetitive conduct unless such conduct has been expressly mandated by rules of ex ante regulation.129 As a result, the effect of this ruling is that, while regulation clearly takes precedence, the rules of competition law remain applicable in situations where undertakings have control over their actions, thus applying concurrently. On its own end, this presents a framework where competition law is treated as supplementing ex ante regulation by conducting an ex post review and the Court explicitly acknowledges that this is the case.130
7. A solution in sight? Tackling the challenges presented by
40 acknowledged as a viable source of remedies that plays a key role in the creation of a potential solution.
The reasons why such an approach has to be adopted mainly stem from considerations about the effectiveness of enforcement, the common nature of the two regimes, and practical experience.
Having in mind what has already been discussed in this thesis, it is safe to state that from a principled perspective States intervene into the operations of markets to make them function more effectively and correct perceived inefficiencies. In essence, States seek to obtain maximum coverage over the perceived problems with the legal tools that are at their disposal and any opportunities for market actors to act outside the control of the state in a harmful manner are to be considered undesirable. Precisely because of this, when setting out to remedy market failures, policymakers ought to combine the remedies that can be provided by ex ante regulation with those that can be provided by competition law. Doing so, allows for a greater number of ways in which market failures can be dealt with, as policymakers can both seek to prevent such failures from occurring at all through forward-looking regulation, yet still control any anticompetitive behaviour that has been left out through the ex post application of competition law. Furthermore, another argument for combining competition law remedies with regulatory remedies stems from the nature of competition law itself. Competition law is inherently flexible due to its broad, open, and general rules and this allows it to address new emerging challenges.131 While this is one of its biggest strengths, at the same time it comes at the expense of a trade-off, namely that its enforcement is an elaborate process that can be very time consuming.132 This limitation,
however, can be circumvented through the use of regulatory remedies. A notable example in this regard would be the Digital Markets Act (DMA) which is currently in the process of being enacted. It is a piece of legislation that is informed by competition law, and seeks to address significant market power by setting obligations on big market actors without possessing the legal constraints present in EU competition law such as for example, the requirements to prove
dominance and anti-competitive effect that are part of article 102 TFEU.133 Furthermore, there have also been practical examples of competition law and regulation being combined to protect
131 Crémer, Montjoye and Schweitzer (n 127) 52.
132 Ibid.
133 Cseres (n 117) 16 and 17.
41 competition in a market. Most notably, the case of Deutsche Telekom provides a good illustration of how the two regimes can operate in a harmonized manner where one would influence the structure of the market and the other would capture anticompetitive behaviour that has not been prevented by this structure.
Going back to the topic at hand, the concurrent application of regulatory and competition law remedies, inevitably shifts the overall framing of the debate and leads to the conclusion that the relationship between them is inherently blurry. The two regimes are not just mere substitutes.
Rather, by their very nature, they are both means for States and the EU to effectively and
efficiently intervene into the operations of markets and because of that they are complimentary to each other. Moreover, further evidence for this complementarity can also be observed in the specific case of algorithmic tacit collusion as it serves as an example of how the raise of digital technologies shows us what the true relationship between the two regimes is.
To start with, even though, as has been noted above, the academic literature has framed the remedies it proposes in light of competition law, some of them can be implemented through both new regulation and changes in the EU competition law framework. An example of this is the solutions proposed by Harrington of devising a per se prohibition on specific types of
algorithms.134 Theoretically, such a prohibition can be imposed through the case-law of the CJEU, if the Court deems in that the adoption of a specific type of algorithm by an undertaking constitutes a violation by object of article 101 TFEU. However, the creation of such a precedent could prove difficult to justify and at the end of the day it will be created by a Court that does not possess detailed expertise in algorithmic technologies. At the same time, an identical prohibition can be imposed through ex ante regulation in the form of legislation that sets out a list of illegal types of algorithms. Such legislation would be easier to justify when compared to the creation of a new judicial precedent and is also likely to be drafted in consultation with relevant stakeholders such as the undertakings that will be affected by it and experts in digital technologies. As a result, the fact that some of the solutions proposed by the academic literature can indeed be implemented in the form of ex ante regulation shows that competition law and regulation are
134 Harrington (n 58) 350.
42 already being, perhaps in a nonconscious manner, shown by some scholars to be complementary in nature. Moreover, this example also shows that the use of ex ante regulation can help the CJEU to avoid coming up with over extensive and hard to justify interpretations of the rules of EU competition law for the purposes of covering gaps in its scope of application.
Furthermore, another evidence for the complementarity of competition law and regulation is the fact that they can still reinforce each other even in cases where there are two rules (one derived from each regime) that may at first glance appear to be completely different. For
example, let us imagine that the proposal by Calzolari of categorizing tacit collusion as a form of concerted practice becomes reality, together with the proposal of Bernhardt and Dewenter of limiting the speed at which algorithms can perform their operations. Even though these two rules appear to be unrelated they can produce a common cumulative effect. The categorisation of algorithmic tacit collusion as a form of concerted practice would deter undertakings from engaging in it. Nevertheless, undertakings are still going to be tempted to do so since colluding in such a way while remaining undetected will result in higher dividends. However, if at the same time, a rule limiting the speed at which algorithms can perform their operations is in place, this would make achieving collusion harder and perhaps even increase the likelihood of the undertakings being caught. Consequently, even though the two rules may seem too distinct from each other they can still contribute to the attainment of the same end-goal and do so more effectively together than they could have done individually.