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Algorithms and collusion – Michal GAL – June 2017 OECD discussion

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This presentation by Michal Gal (Professor of Law at University of Haifa Law School, Israel) was made during the discussion “Algorithms and collusion” held at the 127th meeting of the OECD Competition Committee on 23 June 2017. More papers and presentations on the topic can be found out at oe.cd/1-0.

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Algorithms and collusion – Michal GAL – June 2017 OECD discussion

  1. 1. Do Algorithms Facilitate Coordination? Michal S. Gal University of Haifa Faculty of Law
  2. 2. 1. Agreement 2. Detection 3. Sanction 4. High entry barriers
  3. 3. :Agreement Speedier calculation Sophisticated calculation Rational decision Known recipe Strong signal
  4. 4. :Detection Monitor Distinguish Sanction: React immediately Calculate risk Credible threat High entry barriers must exist
  5. 5. “Digital Shadow” Stronger incentives But more difficult Market sharing Data sharing
  6. 6. Market Solutions? Algorithmic Consumers "I never think of the future. It comes soon enough..." Albert Einstein
  7. 7. offer more information Identify the need execute the transaction game changer
  8. 8. Lower costs Speedier decision More sophisticated Less decisional energy Lower consumer biases
  9. 9. Downsides? Cyber harms Wrong preferences Reduction in autonomy Psychological effects Social effects Exercising our decision muscle Knowing our world Privacy
  10. 10. Anti-discrimination Anti-collusion Anti-concentration
  11. 11. Algorithmic Buyer Power Access to Users Access to Data Domination by the big 5
  12. 12. Legal Questions (Agreement) • Do algorithms that facilitate coordination fulfill the requirement of “an agreement”, and if so- under which conditions?; • What exactly do we wish to prohibit and can we spell it out clearly for market participants?; • Is there justification for widening the regulatory net beyond its current prohibitions, in light of the changing nature of the marketplace.
  13. 13. Agreement? Simple scenario “explicit agreement”? Tacit Collusion Facilitating Practices Parallel adoption? No justification?
  14. 14. Which conduct to prohibit? Chilling effect Areeda test Develop red flags Deep learning?
  15. 15. Widening the net how much transparency? Explainability? Playing catch up...

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