CMA launches call for evidence on harms to consumers and competitors through the use of algorithms

January 21, 2021

The CMA has launched a call for evidence inviting views and evidence on the harms outlined in its paper on algorithms and information on specific issues with firms that the CMA could examine and consider for future action. Algorithms have enabled considerable gains in efficiency and effectiveness, such as repricing portfolios of thousands of products in real time. Importantly, algorithms are at the heart of many technology companies, including some of the world’s most strategically significant firms. However, algorithms can be used in ways that reduce competition and harm consumers. As algorithmic systems become more sophisticated, they are often less transparent, and it is more challenging to identify when they cause harm.

The paper identifies potential harms to competition and consumers from the use of algorithms, focusing on those the CMA or other national competition or consumer authorities may be best placed to address. These include direct harms to consumers, such as personalisation of prices and other aspects of online choice architecture such as dark patterns. They also include harms to competition, such as the use of algorithms to exclude competitors (for example, to facilitate self-preferencing) and the potential for algorithms to facilitate collusion. 

The CMA points out that in the UK, traders have a general duty not to trade unfairly and act in accordance with the requirements of professional diligence. Compliance with equality and data protection law is part of these requirements.

The paper also summarises techniques that could be used to analyse algorithmic systems and the role of regulators in addressing these harms.

The CMA’s consultation asks:

  • Are the potential harms set out in the review paper the right ones to focus on for the CMA’s algorithms programme? Are there others that not covered that deserve attention?
  • Do readers agree with how the CMA has described each harm, and are there other examples that demonstrate them in addition to the examples included?
  • How likely and impactful are the identified harms now, and how might they evolve in the next few years?
  • Are there specific examples that the CMA should investigate further to consider whether they are particularly harmful and potentially breaching consumer or competition law?
  • Are there any examples of techniques that the CMA should be aware of or that it should consider beyond those that it has outlined?
  • Are there other examples where competition or consumer agencies have interrogated algorithms that it has not included?
  • Is the role of regulators in addressing the harms set out in the paper feasible, effective and proportionate?
  • Are there other ideas or approaches that the CMA should consider as part of its role?

The consultation ends on 16 March 2020.