Artificial Intelligence and Competition Law: The Challenges of Algorithmic Collusion

Published on: 13th November 2025

Authored by: Manmohan Ji Pandey
SOA National Institute of Law

Chapter – I

Introduction.

The online platform business model is used by  numerous of the most  precious associations in the world to connect  colourful  customer groups, including suppliers and  guests looking to distribute with one other. The purpose of this composition is to define these platforms’ proper legal bracket and the ramifications for competition law. In order to achieve this, it investigates two affiliated issues first, whether platforms act as agents for their suppliers; and second, whether agreements between platforms and suppliers that limit competition on the applicable  request for the goods or services that the platform facilitates a  sale about should be covered by the competition law’s ban on anticompetitive agreements. The first question comes up because  numerous platforms claim to be agents of their suppliers, and the platform business model most  nearly resembles an agency structure.  Cases involving abuse of dominance under Composition 102 TFEU Given the implicit complexity performing from the two or multi-sided nature of online platforms, it’ll be necessary to reassess the  request  description process. In order to precisely describe the extent of these  requests, it’ll be necessary to first ascertain the number of  material  requests that must be  linked in each situation. Unfortunately, business reality is  inharmonious with the being  styles for this first,  new step of the  request defining process. In order to  insure the  delicacy of the  request  description findings, this composition offers a different  system for handling this intricacy. thus, this composition suggests that the number of applicable  requests in each case should be grounded on the type of  relations that the online platform facilitates and the extent to which, from the  standpoint of its  client groups, the online platform can be substituted with other non-platform endeavours.

Chapter – II

Growth of Internet Industries and Consumer Protection.

The online platform business model is used by  numerous of the most  precious associations in the world to connect  colourful  customer groups, including suppliers and  guests looking to distribute with one other. The purpose of this composition is to  rightly characterize these platforms  fairly and  bandy the ramifications for competition law. still, the  supposition that they aren’t agents has given rise to the decision- making process and commentary. The” agency rule” under the” single  profitable  reality doctrine,” which states that restrictive agreements between an agent and a  star  do within the same” undertaking” and are  thus pure from the competition law’s ban on anticompetitive agreements between distinct undertakings, is the reason behind the alternate query.  Key generalities and Laws  Competition Law This body of law aims to promote and maintain fair competition by regulating anti-competitive conduct by companies. Anti-Monopoly Measures Laws  help businesses from gaining  inordinate  request power, which could lead to advanced prices, reduced  invention, and smaller choices for consumers.  illegal Trade Practices These are practices that give one company an  illegal advantage over its challengers,  similar as deceptive advertising, false claims, or misleading  elevations.  conspiracy Agreements between challengers to fix prices, divide  requests, or  circumscribe competition are illegal.  Digital Doorkeepers Companies that control access to certain digital services, like hunt machines or social media platforms, are subject to specific regulations to  help them from favouring their own services or blocking challengers unfairly.  Consumer- protection law is vital for  icing that  request- grounded  husbandry work in the  profitable interest of consumers as well as businesses, and  therefore to the benefit of society as a whole. This is well understood. Caveat emptor-” let the buyer guard ” may have made sense as the  dereliction  threat allocation between buyer and  dealer in the  vill  commerce of  history, in which deals were  fairly small, and buyers and  merchandisers were likely to know and anticipate  unborn dealings with each other.

 Chapter – III

Changing Dynamics of Algorithmic Collusion.

How conspiracy works and occurs.  When two or  further parties  machinate in a planned, covert manner to  negotiate a participated  ideal, it’s appertained to as  conspiracy. When agitating algorithms,  conspiracy  generally refers to the coordinated  operation of several algorithms to  impact the results of a decision- making process,  constantly for immoral or illegal reasons. There are a number of ways that algorithmic  conspiracy might be, depending on the particular situation in which the algorithms are being applied. Four  styles  live for using algorithms for  conspiracy, according to Ariel Ezrachi and Maurice E. Stucke  Algorithm Collusion in India.  In India, there’s growing concern over algorithmic  conspiracy, especially in relation to online  requests and online advertising. Because it might affect in  lower competition, advanced prices, and smaller options for consumers, algorithmic  conspiracy can have a big effect on consumer  weal and competitiveness in India. The Competition Commission of India( CCI) is in charge of upholding the Act in India, which attempts to  guard consumers against anti-competitive  gest and encourage competition. Companies that engage in anti-competitive  gest,  similar as algorithmic  conspiracy, may be delved  by the CCI and subject to  warrants.  Several  diligence, including social media, ride- hailing, and e-commerce, are susceptible to algorithmic  conspiracy. The purported price- fixing and  request- controlling  conspiracy between lift- hailing services like Ola and Uber is one case of algorithmic  conspiracy in India. Both companies were the subject of an inquiry by the CCI in 2018. nonetheless, the National Company Law Appellate Tribunal( NCLAT) affirmed the same findings after the CCI  latterly rejected claims of price- fixing against both  pots.  Regulation under Indian Competition law.  conspiracy between businesses is banned by Section 3( 3) of the Act. It declares that any agreement among businesses,  opinions made by business groups, or coordinated  conduct by businesses that have the impact of limiting, blocking, or distorting competition in India will be  supposed anti-competitive. Section 4 of the Act forbids the abuse of a dominant position in addition to Section 3. It’s illegal for a business with a dominant  request position to abuse that position by  sharing in anti-competitive conditioning like algorithmic  conspiracy. To stop algorithmic  conspiracy and other anti-competitive  gest, CCI has  espoused a multifaceted strategy. request  exploration in a number of  diligence, including e-commerce, is one of the measures used to find anti-competitive  gest, similar as algorithmic  conspiracy. To stop algorithmic  conspiracy and other anti-competitive  gest, CCI has  espoused a multifaceted strategy.  Challenges ahead of CCI.  Despite  colourful  sweats, the CCI face several challenges in dealing with algorithmic  conspiracy. Some of the  crucial challenges are Difficulty in discovery Algorithmic  conspiracy can  do in complex and  connected systems, making it  delicate to  descry and understand the underpinning causes. This can make it challenging for competition authorities to identify cases of algorithmic  conspiracy and to take applicable action. Lack of  translucency numerous algorithms used in digital  requests operate behind the scenes, making it  delicate to understand how they’re making  opinions and to identify cases of algorithmic  conspiracy. Difficulty in proving anti-competitive intent The Act requires  substantiation of anti-competitive intent, but algorithmic  conspiracy can  do without any  unequivocal intention to harm competition. This can make it  delicate for competition authorities to bring cases against companies for algorithmic  conspiracy. 

Chapter – IV

Competition Law and Artificial Intelligence – Challenges and Opportunities.

WHAT IS AI FROM THE PERSPECTIVE OF LAW?

The  veritably  description of AI proves quite a challenge in itself. Actually, it’s a subject of  multitudinous delineations formulated on the ground of  colourful fields of  wisdom, yet it has not been given a single, universal and generally accepted meaning( which is  else accepted at times). There’s no normative  description of AI in the  public and  transnational legal order. Also, legal jottings devoted to AI  frequently( if not as a rule) don’t define this conception at  each, assuming its certain intuitive understanding or reaching for non-legal explanations of AI(  generally of a specialized or sociological character). There’s no  mistrustfulness that the AI conception is extremely  spacious,  miscellaneous and  nebulous and at the same time  explosively dependent on the specific  environment in which it’s examined and applied.  In a nutshell, AI means a collection of technologies that combine data, algorithms and calculating power or a specific combination of complex algorithms in a system able of perceiving the  terrain and affecting it.   Challenges For Competition Law in The Face of AI.  Radical changes in the functioning of  numerous  requests, caused by AI development and proliferation, and especially the affiliated  pitfalls pose a number of challenges for competition law. These challenges differ significantly depending on whether AI amplifies only conduct which is  formerly covered under the current legal  frame or whether it creates, to some extent, new  pitfalls related to behaviours not covered by the current antitrust rules. In the first case, the problem doesn’t  feel exceptionally complicated, because the question of using AI ought to be assessed together with the main  violation that it helps  apply.

Case Law

Texas Attorney General v. Google (The “Ad Tech” Antitrust Lawsuit).

Background

Filed in December 2020 by Texas Attorney General Ken Paxton and 9 other US states.

The lawsuit focuses on Google’s dominance in online advertising (“ad tech”) markets.

Central claim: Google allegedly manipulated the online ad auction ecosystem to maintain monopoly power and stifle competition.

Key Allegations.

  1. Manipulating Auctions:

Google operates both sides of the online ad market: the buy-side (for advertisers) and the sell-side (for publishers).

Allegedly rigged ad auctions to favour its own products over rivals like OpenX and AppNexus.

  1. “Jedi Blue” Agreement:

A secret deal between Google and Facebook (Meta).

Facebook agreed not to compete with Google in certain online ad auctions (Header Bidding).

In exchange, Google allegedly gave Facebook preferential treatment in auctions (faster data, direct access to servers, etc.).

Antitrust risk: a dominant company (Google) colluding with a major competitor (Facebook).

  1. Use of AI/Algorithms:

Google’s AI-driven auction technologies allegedly tilted auctions so that Google always won.

Techniques like “Dynamic Revenue Sharing” made sure that even if Google’s services were worse for publishers, they still got favoured.

Automated optimization created an appearance of fair competition, but was allegedly self-serving.

  1. Market Lock-in:

Google’s integration of its ad tools, search data, and publisher services made it nearly impossible for rivals to compete.

Example: forcing the use of Google Ad Manager if publishers wanted access to Google’s huge ad buyer base.

Legal Basis

Violations of:

Sherman Antitrust Act, Section 1 (illegal agreements/conspiracies)

Sherman Act, Section 2 (monopolization and abuse of dominance)

Various state-level antitrust laws.

Current Status (as of 2024–2025).

Ongoing in the US courts.

Several redacted documents have been unsealed, revealing more about Google’s internal strategies.

Google argues the lawsuit misrepresents its practices and that the ad market is highly competitive.

No final decision yet, but settlement talks and parallel investigations continue (including a federal DOJ case against Google).

Relation to Algorithmic Collusion.

Not “pure” AI collusion (i.e., independent algorithms learning to collude).

But very relevant because:

Allegations that algorithms were designed to favour Google secretly.

Secret coordination (Jedi Blue) between competitors, aided by complex AI auction systems.

Shows how opaque algorithms can facilitate anticompetitive behaviour hard to detect.

Fun Fact

The term “Jedi Blue” combines “Jedi” (Star Wars) and Facebook’s internal codename “Blue”  the secrecy hints at how seriously the companies took hiding this deal from regulators.

Quick Summary.

Texas v. Google is a hybrid between classic secret agreements and new tech-based manipulation.

It shows how dominant firms can weaponize algorithms in a way that’s much harder for regulators to catch compared to traditional cartels.

The case may set new rules for antitrust law in the algorithmic age — especially concerning opacity and platform power.

Chapter – V

Digital Competition Law.

In February 2023, the Ministry of Corporate Affairs( MCA) constituted a Committee on Digital Competition Law( CDCL) to examine the need for a separate law on competition in digital  requests. The CDCL  meditated on the issue for a time and came to the conclusion that there was a need to condense the current ex-post  frame under the Competition Act, 2002 with an ex-ante  frame. It laid out this ex-ante  frame in the draft Digital Competition Bill.  What’s digital competition Bill?  You might be wondering,” What exactly is the Digital Competition Bill?” To put it simply, it’s a proposed law intended to guarantee  indifferent competition in the online  request. As the online frugality grows, some big players dominate certain sectors, making it hard for new businesses to thrive. This Bill aims to level the playing field by establishing rules that promote competition and check monopolistic practices. suppose of it as a  frame to keep the virtual  request fair and open, where startups and  lower players can  contend without being crushed by the big tech  titans. 

Why Do We Need the Digital Competition Bill? 

As businesses decreasingly operate online, traditional competition laws haven’t  relatively kept up with the new dynamics. 

  1. Bridling Market Power of Big Tech Companies like Google, Amazon, and Facebook hold significant request power,  frequently acting as doorkeepers. This Bill aims to  help  similar dominant players from engaging in anti-competitive practices that can harm  lower businesses and consumers. 
  2. icing Fair Access The Bill seeks to give fair access to digital platforms for all businesses. suppose of it as setting rules so that  lower players get a fair shot at using online  commerce or advertising services without being unfairly pushed away.  3. Encouraging Innovation  When  lower companies are given a chance to thrive, it encourages  invention. The Bill aims to  produce an  terrain where startups can bring new ideas to the table without facing  walls set up by established players.

Annexure – I

Bibliography

  1. Artificial intelligence and collusion: A literature overview, Steven Van Uytsel, Robotics, AI and the future of law, 155-182, 2018.
  2. Online platforms, agency, and competition law: mind the gap, Pinar Akman, Fordham Int’l LJ 43, 209, 2019.
  3. Applying (EU) competition law to online platforms: Reflections on the definition of the relevant market (s), Daniel Mandrescu, World competition 41 (3), 2018.
  4. The Future of Global E-Commerce Regulation: Legal Challenges in Ensuring Fair Competition, Consumer Rights, and Data Protection, Reza Saberi, Samira Sadeghi, Legal Studies in Digital Age 1 (1), 39-52, 2022.
  5. Bruce Kilpatrick, Pierre Kobel, Pranvera Këllezi , Antitrust analysis of online sales platforms & copyright limitations and exceptions , Springer, 2018.
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  8. Competition Law, Avtar Singh (Neha Vyas).

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