The firm’s report warned businesses to watch out for heightened scrutiny from regulators
Bell Gully has flagged algorithmic collusion and AI-enabled cartel conduct as challenges facing the competition law space in its report Algorithmic collusion and AI cartels: risks under New Zealand’s Commerce Act.
Given the increased use of AI to make decisions on pricing, procurement, forecasting, customer engagement and other business matters, the report warned organisations to watch out for strictness on the part of regulators.
“AI is transforming how businesses make decisions across their operations. While these tools can deliver significant benefits, they can also create competition law risks that businesses may not immediately recognise. New Zealand’s competition rules apply whether decisions are made by people or algorithms. Businesses remain responsible for the competitive outcomes produced by their AI tools”, said Bell Gully partner Glenn Shewan.
The report suggested that AI could be used to keep track of competitors and respond with anti-competitive measures. It defined algorithmic collusion as AI systems reducing competition by influencing pricing or market behaviour, which would lead to cartel-like results without direct human agreement.
The Commerce Commission had indicated that it would track developments in AI and pricing algorithms, Shewan added. The Commerce Act provisions that apply to AI use are as follows:
Thus, businesses needed to have proper governance, oversight and compliance measures in place.
“International regulators are already taking action on AI-enabled cartel conduct and algorithmic pricing practices. Given those global enforcement trends, New Zealand businesses should expect increasing scrutiny in this area”, he said.
The report noted that competition law cases involving AI and algorithmic tools have already emerged in the US, UK, European Union, Mexico and Brazil. These cases have identified the tools and behaviours most likely to violate competition law.
The Algorithmic collusion and AI cartels: risks under New Zealand’s Commerce Act report is part of Bell Gully’s Big Picture report series. Shewan penned the report alongside fellow partner Torrin Crowther, special counsel Penny Pasley and senior associate Emma Quigley.
