Competition Bureau discussion paper seeks input on AI's potential anti- and pro-competitive impact

Competition regulators are turning minds to AI globally, says Fasken's Antonio Di Domenico

Competition Bureau discussion paper seeks input on AI's potential anti- and pro-competitive impact
Antonio Di Domenico, Fasken

On March 20, the Competition Bureau of Canada released a discussion paper exploring the impact of artificial intelligence (AI) on competition in the Canadian economy.

The bureau said it aims to spark dialogue to facilitate a greater understanding of the development of competition in AI markets so it can enforce and promote competition in those markets. The bureau outlined how AI could impact mergers, monopolistic practices, cartels, and deceptive marketing. It also examined how AI technology could enhance competition. The paper did not contain any recommendations.

The impact of AI on competition enforcement is an emerging issue that agencies worldwide are turning their minds to, says Antonio Di Domenico, co-leader of competition, marketing, and foreign investment at Fasken.

“The Competition Bureau is not unique. Anti-trust and competition agencies around the world are exploring the role of AI in competition,” he says. “This discussion paper will now be informative in Canada, but we should also recognize that agencies around the world are considering the same issue. This is part of a much, much larger global discussion about the role of AI in competition policy globally.”

The bureau seeks feedback on the paper from stakeholders who do business in AI markets and those with expertise in AI technologies.

According to the bureau, the markets involved in AI production include those that supply computing power and data required for its development; the markets that supply AI models, algorithms, and architectures; and the markets that supply customer-facing AI products and services.

The development of AI-powered pricing algorithms has led to research and discussion concerning the potential for “tacit algorithmic collusion,” said the bureau. A pricing algorithm allows a company to optimize pricing in real-time by using AI and machine learning to evaluate factors like supply and demand and competitor pricing. The bureau said that horizontal competitors’ use of AI could autonomously “learn and implement coordinated strategies, similarly to what may be implemented by an explicit cartel.”

Di Domenico says that the bureau is flagging the possibility that pricing algorithms, where competitors can monitor and adjust prices and exchange otherwise commercially sensitive information, could raise concerns under the Competition Act’s collusion provisions.

The discussion paper also included a section on how autonomous AI tools and generative AI can be used for deceptive marketing practices, such as deceptive telemarketing or prize notices. Deepfake voices, images, and videos can also make deceptive marketing conduct more convincing.

The bureau is also focused on potential exaggerations or misleading statements about an AI product’s capabilities, says Di Domenico.

In addition to the potential for anti-competitive conduct that could come along with the advancement of AI technologies, the bureau is seeking feedback on how those technologies have the potential to promote competition.

“AI as a tool for competition promotion is something that the bureau should consider significantly given the innovation arising out of AI that can benefit consumers from both a price and a non-price perspective,” says Di Domenico.” The bureau should also consider the “efficiencies and, in particular, dynamic efficiencies that can be achieved through AI.”

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