CYIL vol. 11 (2020)

MICHAL PETR CYIL 11 (2020) Tacit collusion […] refers to forms of anti-competitive co-ordination which can be achieved without any need for an explicit agreement, but which competitors are able to maintain by recognising their mutual interdependence. In a tacitly collusive context, the non-competitive outcome is achieved by each participant deciding its own profit- maximising strategy independently of its competitors. This typically occurs in transparent markets with few market players, where firms can benefit from their collective market power without entering in any explicit communication. 64 Tacit collusion is therefore sometimes referred to as the “Achilles heel” of competition law, 65 as it describes a behaviour which leads to higher consumer prices in the same way as cartels do, but it cannot be classified as an anticompetitive agreement, because there is no coordination – in the legal sense of the word – among the oligopolies. Until recently, the tacit collusion has often been viewed as a theoretical concept, not achievable and in particular not sustainable in practice. 66 The worries however grow that it may be turned into reality by parallel deployment of pricing algorithms, which leads us back to our main topic. The Predictable Agent scenario covers situations where several undertakings individually deploy pricing algorithms which are prone to “cooperation” and thus more likely to sustain tacit collusion. As the OECD warns: One of the main risks of algorithms is that they expand the grey area between unlawful explicit collusion and lawful tacit collusion, allowing firms to sustain profits above the competitive level more easily without necessarily having to enter into an agreement. For instance, in situations where collusion could only be implemented using explicit communication, algorithms may create new automatic mechanisms that facilitate the implementing of a common policy and the monitoring of the behaviour of other firms without the need for any human interaction. In other words, algorithms may enable firms to replace explicit collusion with tacit co-ordination . 67 We do not have any evidence that this scenario does take place in practice. Indeed, only a minority of markets, fulfilling conditions outlined in economic theory, will be susceptible to tacit collusion. 68 Still, this is not a reason to suspend debate on it, 69 at least as far as legal theory is concerned. The first question is whether tacit collusion may be classified as an agreement; clearly it cannot, and even though there have been some voices advocating for a change in approach, 70

64 FAULL, NIKPAY ( op. cit. sub 55), p. 1051. 65 COLOMBO ( op. cit. sub 54), p. 14.

66 For a detailed summary of these arguments, see e.g. SCHWALBE, U. Algorithms, Machine Learning and Collusion (28 August 8. 2018). Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3232631 (1. July 2020), p. 18 et seq . 67 OECD Report on Algorithms , p. 25. 68 In detail, see e.g. EZRACHI, A., STUCKE, M. A. Sustainable and Unchallenged Algorithmic Tacit Collusion. Oxford Legal Studies Research Paper No. 16/2019. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=3282235 (1 July 2020), p. 9 et seq . 69 HARRINGTON ( op. cit. sub 62), p. 346. 70 KAPLOW, L. On the meaning of Horizontal Agrements in Competition Law. Cal l Rev , 2011 (99), p. 683.

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