back to article Algorithmic pricing raises concerns for EU competition law enforcement

Algorithms used to track or adapt prices online raise competition concerns, according to a recent submission to the OECD by the European Union. If pricing practices are illegal when implemented offline, they are very likely to be illegal when implemented online as well. Firms involved in illegal pricing practices cannot avoid …

  1. Anonymous Coward
    Anonymous Coward

    Pretty pointless

    When certain manufacturers already clearly try to operate resale price maintenance without any sanctions. That includes several car makers (although they struggle to control the dealers on that), and a number of Japanese tech companies, where funnily enough every outlet charges the same price, from local specialists in cheap locations, up market specialists in expensive locations, big box discounters, and premium department stores.

    Why bother with an algorithm when the old fashioned "sell at our chosen price or lose the franchise" works well enough?

    1. Anonymous Coward
      Anonymous Coward

      Re: Pretty pointless

      Concur.

      I will believe in the Eu commission and other competition authorities doing anything about it the day when I see a Giant bicycle (or part of it) sold by an authorized reseller at a sale price lower than the price mandated by Giant.

      This is just one example off the top of my head. Plenty of others.

      The article is incorrectly named though. Algorithmic pricing as done by airlines, hotels, wholesale commodities, etc != algorithmic price monitoring as discussed in the article. The latter is a completely different beast and is nearly always anticompetitive when you are monitoring the price at which someone else re-sells YOUR product.

    2. Anonymous Coward
      Anonymous Coward

      Re: Pretty pointless

      Not just one country. I've seen (we know of them all?) tech and electronics for sale in all places with less than £10 difference across the country.

      They have "set" prices, and you don't get stock if you don't keep to it. Oh, and their wholesale purchase price? £10 under the selling price, hence some being able to offer a difference, at a loss!

    3. Joe Montana

      Re: Pretty pointless

      Well if retailers don't all sell at the same price, those retailers with lower overheads through economies of scale will charge the customers less and smaller retailers invariably end up going out of business. Sometimes the larger retailers will even sell as a loss specifically to drive the small independent shops out of business, and then bring prices up once those competitors are gone.

  2. werdsmith Silver badge

    Who is doing this stuff? Airlines adapt their fares, there used to be a problem where a bargain price was presented, and if you declined, but came back later to book those same seats, the price was increased. But, clear cookies out and try again and you see the original lower price.

    Also, I've seen what seemed to be implausible bargains on Amazon, only to find actually purchasing them was impossible. Theory is that they are put on Amazon to influence the price from other sellers via the algorithms, allowing a real bargain to be had.

    1. Voland's right hand Silver badge

      Also, I've seen what seemed to be implausible bargains on Amazon

      There is both that and putting ridiculous prices on items like 1200 grand for a bag of bolts. Both are done specifically to skew other people's pricing algos and amazon pricing assistance tools (there is a nice cottage industry brewing which helps your determine and alter pricing based on what other people are selling their goods for).

      Theoretically - you can complain to Amazon about it. Practically - it is a wild East (not even West) environment.

      1. Aitor 1

        Percentile 95

        That is why if you have half a brain you use percentile 95 prices, and discard garbage.

    2. Anonymous Coward
      Anonymous Coward

      There were also cases of hotel booking sites charging more and offering more expensive rooms to Apple users.

      Arrive at site on iPhone, 5* rooms offered, other rooms 10% more expensive.

      Arrive on a Droid, get 3 star rooms and normal prices.

      Arrive on a Winphone, get offers on an abandoned cabin in the wilderness

      1. Cuddles Silver badge

        "There were also cases of hotel booking sites charging more and offering more expensive rooms to Apple users."

        As the AC in the second post notes, that's a completely different, unrelated thing. Setting personalised prices for customers is not the same as monitoring the prices of your competitors and/or resellers. The former can seem unfair from a customer's point of view (from the point of view of one seeing the higher prices at any rate), but is not generally illegal and is ultimately just capitalism in action - prices are whatever the market will bear, and if you can subdivide people into different markets each one can bear a different price.

        The latter is a different animal entirely - if a retailer monitors competitors and sets prices to be the same as them, competition is removed and you effectively have a price fixing cartel. Similarly, if a manufacturer monitors prices and punishes retailers who don't adhere to a "recommended" price, again competition is removed. Essentially, algorithmic price monitoring can lead to companies accidentally forming a cartel without ever actually needing to agree to anything, or even talk to each other at all, while on a manufacturer's part it can force retailers into such a cartel in a similar way even if they'd prefer to avoid it themselves.

        If anything, while people might not like personalised pricing it's actually a solution to this issue, since it means matching prices to what you think a given customer will pay rather than to the price other retailers are charging. Only if retailers used identical algorithms operating on identical data would you get the lack of competition that is the concern here. Any issues of such personalisation, privacy and data protection being the obvious big ones, are an entirely separate matter.

        1. strum

          >if a retailer monitors competitors and sets prices to be the same as them, competition is removed

          No. That's 'perfect competition', where competitors adjust their prices according to other competitors (and purchaser's actions). Competition is lost if the retailers agree a price they will all set.

        2. Joe Montana

          Discrimination...

          It should really be the other way round... Responding to your competitors pricing strategies is how competition is supposed to work, whereas charging some customers more than others for the same thing is a form of discrimination which should be illegal.

        3. Anonymous Coward
          Anonymous Coward

          Setting personalised prices for customers is not the same as monitoring the prices of your competitors and/or resellers. The former can seem unfair from a customer's point of view (from the point of view of one seeing the higher prices at any rate), but is not generally illegal

          Hmmm, I'm pretty sure that sort of thing is illegal. What about differentiating prices on the basis of other facets? What about if there were a correlation between certain Android OS versions and being less well off and you thereby priced those people out of the market because you didn't want the riff-raff? Yep, I'm almost certain it is illegal. Perhaps what you really mean is "not currently adequately policed or prosecuted" on the grounds that it isn't necessarily immediately obvious and someone has to be looking for it. Uber's shenanigans being a case in point.

    3. Anonymous Coward
      Anonymous Coward

      Region plays a big role as well. Which is why I always book airline tickets via SSH tunnel to South Africa. Usually at least 10% cheaper on BA and Emirates. Especially if the RAND is weak(er).

      1. Down not across Silver badge

        Airfares

        Region plays a big role as well. Which is why I always book airline tickets via SSH tunnel to South Africa. Usually at least 10% cheaper on BA and Emirates. Especially if the RAND is weak(er).

        Airfares are funny things. A while back for some journeys (within EU) it was cheaper to buy 2 return tickets "the wrong way around" than the one return ticket you actually wanted.

      2. Anonymous Coward
        Anonymous Coward

        "Region plays a big role as well. Which is why I always book airline tickets via SSH tunnel to South Africa. Usually at least 10% cheaper on BA and Emirates"

        a while ago, was trying to book a flight and had a similar situation by mistake: I'd forgotten VPN still up? An airline advert with a very good price came up at the side of a search result page, so I went to look at that, only to be told the price was (a) only valid on USD, and (b) not available in "your" country. It actually was available in my country, as soon as i dropped the VPN - but thè EUR price was heading towards twice the USD ohe, and as soon as address entered, the option to pay in dollars vanished.

    4. Anonymous Coward
      Anonymous Coward

      > Who is doing this stuff?

      Read the fucking article, please. The subject at hand is not dynamic pricing, which is what you are discussing for some reason.

  3. Anonymous Coward
    Anonymous Coward

    Can't wait for Expedia

    And its vast hoard of slave Travel sites to get on-board with this - Oh wait.... !

  4. Anonymous Coward
    Anonymous Coward

    If you don't like the price then don't buy it.

    What you don't want to haggle ?

    1. Anonymous Coward
      Anonymous Coward

      I do want to haggle, but ill only haggle if you do 50% of the haggling.

  5. Anonymous Coward
    Anonymous Coward

    Saw this behaviour on the EuroStar ticket last year

    Tried booking a ticket on Eurostar from my PC. Didn't complete the transaction.

    Tried again from the same PC 10 minutes later and the price had gone up 10%.

    Tried booking from a different PC and the original price was displayed.

    Tried again from the 1st PC and the increased price was still showing.

    There ought to be a Law against that sort of thing - I think it's called discrimantort pricing.

    1. Anonymous Coward
      Anonymous Coward

      Re: Saw this behaviour on the EuroStar ticket last year

      > I think it's called discrimantort pricing.

      Close enough. It is called discriminatory pricing, or price discrimination if you prefer, and is perfectly legal, and reasonably so. "Discriminatory" in this use means "recognising a distinction", does not carry any negative connotations, and is and has always been a standard practice for at least five millennia.

      The fact that you pay let us say £1.00 for some chocolate at a petrol station and pay £3.00 for the same product at some upmarket shop is (partly) an example of discriminatory pricing. In some cases, the discrimination strategy may drift into silly territory (especially nowadays with data-obsessed managers) or be accompanied by practices which are actually illegal, but in most cases it's quite a reasonable and common profit maximisation strategy.

  6. Anonymous Coward
    Anonymous Coward

    What is interesting

    More than the copypasta from the OECD document, are the responses from the various other contributors:

    The industry representatives are "not in favor of mandating the publication of proprietary algorithms developed by companies, or to otherwise regulate the use of those algorithms". Colour me surprised.

    The EU, we already know their position from the article.

    The UK: blah blah blah "challenges for competition authorities in effectively detecting, assessing and – where concerns are found – addressing such potential harm". Translation: concerns will not be found.

    The Russians (page 6): "initiated dawn raids of those companies." Bless them. :-)

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