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Tackling competition in the digital space

Tuesday 28 November 2017

The Australian Competition and Consumer Commission (ACCC) is looking to establish an analytics unit to tackle data e-collusion.

The unit will be involved in a number of market studies, as well as assisting the ACCC’s investigations teams and economists.

According to Rod Sims, ACCC Chair, there are a lot of benefits to data-driven innovation.

“Clearly, however, these developments have many consequences for markets, and the ACCC is considering cases where algorithms are deployed as a tool to facilitate conduct that may contravene Australian competition law,” he added.

The concept of open data has been seen as the key driver to levelling the playing field, especially when it comes to the financial services sector.

However, those who have access to such data sets may use them for an unfair advantage.

“Some argue that under the right market conditions, pricing algorithms may be used to engage more effectively in and sustain collusion, whether ‘tacit’ or not, reducing competition but without contravening competition laws. It is said that a profit-maximising algorithm will work out the oligopolistic pricing game and, being logical and less prone to flights of fancy, stick to it,” Sims said.

Sims said it might be difficult to establish that a firm with market power had an uncompetitive advantage, but that Section 45 of the Competition Consumer Act 2010 and the Misuse Market Power Act could be effective and assist in prohibiting this conduct.