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Algorithms no excuse for cartel behaviour, says European commish

HGTTG's Deep Thought shouldn't be used for price-fixing

European Commissioner has urged competition enforcers to keep an eye out for cartels that use software “to work more effectively”, in a speech about algorithms and competition today.

Margrethe Vestager, the competition commissioner, said: "If those tools allow companies to enforce their cartels more strictly, we may need to reflect that in the fines that we impose."

She said: “We’re not yet dealing with an algorithm quite as smart as [Hitchiker’s Guide to the Galaxy’s] Deep Thought. But we do have computers that are more powerful than many of us could have imagined a few years ago. And clever algorithms put that power – quite literally – in our hands.”

However, she said was difficult to determine how the algorithms work and what they display.

“When an algorithm makes it harder to find rivals’ products, that could deny those rivals the chance to compete. And the result could be higher prices, and less choice, for consumers. That's precisely the issue in our case with Google Shopping."

The commission is currently investigating Google over allegations that its comparison shopping and advertising-related practices breach EU rules.

Last year Vestager said the commission’s preliminary probe into Google Shopping had revealed that Google has “unduly favoured its own comparison shopping service in its general search result pages”, meaning “consumers may not see the most relevant results to their search queries".

She said automated systems could be used to make price-fixing more effective. "The commission has created an IT system to help people tell us anonymously about cartels."

Vestager cited the example of a Lithuanian travel booking system sending an electronic message to its travel agents, which proposed to limit discounts to no more than 3 per cent, several years ago.

“[T]he European Court made clear that travel agents who saw that message and did not distance themselves from that proposal could have found themselves caught up in a cartel.

“So as competition enforcers, I think we need to make it very clear that companies can’t escape responsibility for collusion by hiding behind a computer program.” ®

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