Sustainable and Unchallenged Algorithmic Tacit Collusion

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Algorithmic collusion has the potential to transform future markets, leading to higher prices and harm to consumer welfare. And yet, algorithmic collusion may remain undetected and unchallenged, in particular when it is used to facilitate conscious parallelism. The risks posed by such undetected collusion have been debated within antitrust circles in Europe, US and beyond. Some economists, however, downplay algorithmic tacit collusion as unlikely, if not impossible. “Keep calm and carry on” they argue, as future prices will remain competitive. This paper explores the rise of algorithmic tacit collusion and responds to those who downplay it, by pointing to new emerging evidence and the gap between law and this particular economic theory. We explain why algorithmic tacit collusion isn’t only possible, but warrants the increasing concerns of many enforcers.