Digital Polyopoly

Abstract

The digital economy has significantly changed many aspects of our lives, including the way firms do business and compete with each other. In addition to the benefits the digital world has introduced, it has also brought challenges for competition law, including new ways to restrict competition, with computing algorithms representing one of the most prominent examples. Algorithms can lead to, facilitate and maintain anticompetitive collusion, and one of the most pressing tests for competition law and its enforcement in the digital world is algorithmic parallel conduct. The terminology introduced for this conduct in this article is ‘digital polyopoly’. Digital polyopolies encompass conditions similar to oligopolies, in particular, interdependency and transparency. However, unlike parallel conduct arising from oligopolies, digital polyopolies are not limited by their number of competitors. This new phenomenon requires fitted interpretation and rethinking of existing competition-law and economic concepts. What digital polyopolies are, how they differ from pre-digital era concepts and how competition law should tackle them (with a particular emphasis on the European Union competition law’s concept of ‘concerted practice’), are questions explored in this article.