India: The "Algorithmic" Factor In Competition Law

Last Updated: 8 November 2019
Article by Khurana And Khurana

The periphery of 'human superiority' has been breached, what we are living in now, is the Fourth Industrial Revolution which is symbolised by the dependence of man over Artificial Intelligence (AI). The Competition Act in India which is not a very old member of the legal fraternity is already affected by the challenges of the Fourth Industrial revolution. The major challenge being that of online pricing Algorithms.


The term Algorithm has not been defined clearly; however a general understanding is that it is the application of reasoning by an AI for the purpose of finding a sequence or solution. 1 One of the aims of competition is to ensure that sellers set a competitive and not collusive price, to protect consumer and economic welfare. However, the Competition Commissions across the Globe have been tackling this very problem of collusive pricing on account of AI based pricing Algorithms. 2 Recently, the European Commissioner for Competition, Margrethe Vestager, expressed concern over the ills of companies trying to hide behind the garb of computer programming when faced by collusion charges. 3 Use of Algorithms is not new but, it is the increase in the use of pricing algorithms that has made it possible for competitors to collude their prices. 4

Pricing Algorithms analyse and collate a pool of data to determine the price of a product or service, thus enabling the sellers to leave the pricing burden on algorithms. 5 The new age development in this area is that of Learning Algorithms, i.e., those which have tendencies of learning by observation and thus may cause a non-human induced collusive behaviour. 6

Algorithmic Collusion

Whenever dealing with Algorithm based collusion it is necessary to keep in mind the fact that it is after all an artificial person that is involved. 7 In the age of e-commerce, the task of Algorithms is to dance to the music provided by humans, thus acting as aids to behavioural actions. 8 The agreements which result in collusive behaviour are anti-competitive agreements however, when the collusion is induced by an algorithm i.e. without an agreement, the illegality of the act is questionable. 9

With "agreements" as the key, an agreement to follow a particular formula or pricing algorithm may be said to be the anticompetitive act. 10 Thus it could be deciphered that, the role of the regulators begins from the finding of such agreements. Ariel Ezrachi & Maurice E. Stucke had analysed the categories of algorithmic collusion as follows- 11

Messenger Scenario

Here the players in the market use the medium of computers or a single algorithm for the purpose of colluding. 12 Such a situation was seen in the case of U.S v. David Topkins 13 wherein the conspirators, agreed to sell their posters (product) by using a single pricing algorithm so as to assist in the likeness of prices amongst them. This was found to be an unlawful agreement. Similarly, in 1994, it was found that six airlines had been sharing a computerized online booking system which enabled collusive price setting and thus it was found to be anticompetitive. 14 Thus the messenger scenario is where the conspirators agree to use the algorithm to implement collusion. 15

Hub and Spoke Conspiracy

This form of conspiracy refers to an agreement between either vertical or horizontal players (spokes) via the medium of a platform (hub), thereby being a sort of indirect agreement. 16 In this case, as in the messenger scenario, a single pricing algorithm is used however, it is the algorithm developer that causes the players to collude. 17 Thus, it is the use of the hub that becomes the subject of agreement.

Predictable Agent

In this category, the players develop separate pricing algorithms however, they are programmed in such a way that all will react in the same way to similar situations so as to result in a tacit collusion. 18

Autonomous Machine

This is considered to be the most advanced category of algorithmic collusion as the AI learns by doing and thus it becomes self-sufficient in predicting the necessary behaviour for colluding. 19


The main problem is that though we are aware that the Algorithms "may" pose a problem to the competition in the market, the watchdogs of competition may not fare so well in dealing with the posed problems. The regulators are yet to understanding the amplitude of data collection and misuse, 20 thus calling for greater research and interpretation of emerging laws such as data protection, privacy etc.

It can be observed that the problem per se is not with the use of Algorithms but instead it is with the agreement to conspire to use a particular algorithm or Algorithm developer for the purpose of collusive actions. The unexplored problem remains to be the enigma of AI taking control over our lives by learning by doing what its master has taught.


1 See, Francisco Beneke& Mark-Oliver Mackenrodt, Artificial Intelligence and Collusion, 50 IIC (Jan. 2019).

2 Noel Beale and Sandra Mayenda, Competition law and ecommerce: 'it wasn't me, it was the algorithm!'Burges Salmon(Nov. 26, 2018)

3 VaibhavChokse,Why digital cartelisation will be a new challenge for the anti-trust regime, Financial Express (Aug 13, 2018),

4 Bill Baer Sonia KuesterPfaffenroth, Pricing Algorithms: The Antitrust Implications, Arnold&Porter(Apr 17, 2018),

5 Id.

6 See, Id.

7 PallaviGuniganti, US DOJ deputy: algorithmic cartel requiresagreement, GCR (Feb. 05, 2018)

8 Supranote 1.

9 Supranote 4.

10 Algorithms and Collusion – Note by the United States, DAF/COMP/WD(2017)41, OECD(Jun 2017),

11 Ariel Ezrachi& Maurice E. Stucke, Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy 46 (Harvard Univ. Press 2016).

12 Maurice E. Stucke&Ariel Ezrachi, How Pricing Bots Could Form Cartels and Make Things More Expensive, HARVARD BUSINESS REVIEW (Oct 27, 2016),

13 United States v. Topkins, No. CR 15-00201 (N.D. Cal. Apr. 6, 2015) (Information and Plea Agreement).

14 Id.

15 Jay L. Himes &Tianran Song, "Welcome to the Hotel California":

The Beast of Algorithmic Pricing, Cpi Antitrust Chronicle(Feb 2019),

16 Roundtable on Hub-and-Spoke Arrangements – Background Note, DAF/COMP(2019)14, OECD (Oct. 2019),

17 Supranote 6 at 573.

18 Madhavi Singh, Algorithmic Collusion in Flight Pricing in India, Law School Policy Review (Nov. 29, 2018)

19 Supranote 14.

20 Supra note 11.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions