Digital Polyopoly


Digital Polyopoly

The digital world is characterised by new technology, high speed and global connectivity. Innovation is constant and the exchange of information is endless. With the development of the digital age many have asked the question as to whether competition law, as introduced in the free market economies, is fit for the purposes of the digital economy and is thus still modern, or whether new ideas have to shape it in order to retain the trust in its purpose and application. One of the most significant areas of concern for competition law and two of the main features of the digital economy are the usage of Big Data and algorithms. Through ongoing connectivity, data gets exchanged, analysed and used via algorithms. Although it is not difficult to point to the benefits Big Data and algorithms have introduced for businesses, consumer welfare and the economy, these digital‐world tools can also be used by a particular entity to, for instance, exclude others from digital markets or facilitate collusion. These represent challenges for the enforcement of anti‐cartel laws, many of which are discussed in the book ‘Virtual Competition ‐ The Promise and Perils of the Algorithm Driven Economy’ (2016) written by Ezrachi and Stucke. In this book, among other things, Ezrachi and Stucke argue that it is the tacit collusion driven and maintained by algorithms that is problematic and challenging for the application of competition law.

In this research seminar, I will address this issue by analysing the different ways that algorithms lead to collusion. The analysis will draw conclusions for competition law in the digital world by comparing collusion created or facilitated by algorithms with the concepts of cooperative oligopolies and natural oligopolies. I will start with characterising and discussing a number of the features of the digital economy arguing, among other things, that the concept of horizontal competition does not fully capture collusion in the digital world, because in this world ‘horizontal’ competition occurs in vertical and ‘diametric’ ecosystems and thus horizontal collusion includes nonhorizontal elements and relationships. I refer to algorithm collusion as ‘digital polyopoly’. I will explain what constitutes this notion, and analyse and compare it to the concepts of, and legal approaches to, cooperative and natural oligopolies to reveal how current competition law can or cannot apply to algorithm collusion.


  • Dr Barbora Jedlickova
    Dr Barbora Jedlickova, TC Beirne School of Law