Categories: Technology

Artificial intelligence must expose illegal price fixing

A comparison algorithm developed by the University of Freiburg and experts from the federal government now supports authorities in recognizing and combating illegal collusion.

A new artificial intelligence can reveal illegal price fixing. The program developed by the University of Freiburg and the Competition Commission (Weko) showed a success rate of more than 90 percent in tests.

The algorithm now assists authorities in detecting and combating illegal collusion in public procurement, the University of Freiburg (Unifr) announced on Thursday.

AI learns from known cases

To do this, the researchers trained an artificial intelligence-based program with historical data that includes both proven price-fixing and collusion-free tenders.

Price fixing often leaves certain patterns or anomalies in the prices offered, as the University of Freiburg explains in the statement. Through the learning process with the available data, the artificial intelligence recognizes these patterns and can distinguish between agreements and normal competition.

“The method is based on a comparison of the prices entered by suppliers and other bidders, as agreements often leave certain patterns in the prices offered. For example, a certain company wins a tender if its price offer is significantly lower than that of its ‘competitor’. Based on proven collusion examples, the artificial intelligence learns such price patterns to distinguish between collusion and non-collusion cases. After the learning process, the algorithm can identify suspicious offers with an increased risk of price-fixing.”

In initial tests, the method correctly identified 19 out of 20 companies as cartel members or competitors, according to results published in the “International Journal of Industrial Organization.”

Sources

  • unifr.ch: Discover cartels using artificial intelligence

(dsc/sda)

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