Algorithmic pricing did not arise in a vacuum but is part of a wider phenomenon of using personal data to profile individuals on the market and make predictions about their preferences and behaviour in future market settings. The potential for price personalization is one of the most important and salient aspects of the wider phenomenon of algorithms and big data analytics that have come to dominate consumer market. The personalization of the contract should not be regarded separately from the personalization of other elements of a market relationship, neither theoretically nor from a practical perspective.

Of the many concerns triggered by the rapid growth of digital commerce and the expansion of the data-based economy, price personalization occupies a prominent yet peculiar position. For many firms, the availability of big data and refined algorithmic tools has opened unprecedented avenues to learn about consumers’ financial and personal standing, market preferences, and transactional behaviour patterns. Building on these insights, firms have (at least to some degree) obtained an ability to make behavioural predictions about the future conduct of their clients, including their interest in a particular assortment of products, responsiveness to certain forms of advertising, and – not least importantly – their willingness to pay a certain price.

This contribution addresses the dilemma of retail price regulation on the consumer market in the economic realities triggered by the COVID-19 pandemic. It discusses the reinvigoration of discussion over price control that ensued in numerous countries as a result of the rapid increase of prices of certain goods (such as medical products and everyday-use utensils). It attempts to preliminarily frame the underlying policy premises of price regulation triggered by the pandemic. It also seeks a more in-depth understanding of the rationale of price review in the extraordinary market conditions, as well as the general rules for allocation of tasks in this regard between public and private law. In so doing, the text focuses primarily on the EU consumer law and attempts to understand what concept of price control it rests on and to what extent it may provide a response to the price concerns in the outcome of COVID-19.

COVID-19 AND PRICE SURGES: MAPPING THE PHENOMENON

The immense and rapid consequences of the coronavirus pandemic triggered for the global economy elicited profound market fluctuations and drew rather gloomy prospects for the post-pandemic realities. One of the most immediate spheres which experienced almost immediate and conspicuous change after the pandemic outbreak were retail prices on the consumer market. Even before the strict health measures were introduced, the spreading awareness of the incoming pandemic resulted in a prompt surge of prices for several everydayneed products, which proliferated even further in the course of the lockdown. The rise of prices in the era of the pandemic was elicited by a rapidly growing demand for particular types of goods and services and an increase of manufacture and supply costs. In this way, the COVID-19 pandemic led to a new incarnation of the age-old concept of “economy of shortage”. In the circumstances of the pandemic, the economy developed several insular shortages of supply, which led to a noticeable surge of prices for particular products. This pertained especially to medical supplies (especially of an everyday use, such as face masks, gloves and disinfectants), as well as for some food products and other basic goods.

INTRODUCTION

Undoubtedly, default rules constitute one of the most characteristic regulatory instruments of contract law, and encapsulate its most crucial concepts concerning the relation between a legal rule and an individual. Under the conventional assumption, default rules are intended to facilitate contracting by providing parties with a choice of pre-set alternatives for the content of an agreement. Current markets, however, alter this general picture to a certain extent. Instead of a general and universal community of contractors, they develop parallel close-knit communities, which are typically brought together through the use of IT tools in order to facilitate contracting amongst their members. They give rise to more constrained and tighter regulatory communities, which develop more specific sub-majorities of preferences. Many of these communities set forth various self-regulatory frameworks, which attempt – at least to a certain extent – to respond to these preferences. Amongst the diverse types of rules that result, there are an increasing number of optional rules, which in many respects resemble classic default rules in contract law. As opposed to the more classic defaults, however, the default rules generated by these private regulators are created for closer regulatory communities about which these private regulators have much more information. They therefore address and reflect the ‘fractioned’ majorities’ preferences.

Although similar occurrences have also been recognised in classic market settings, the clusters of contractors created currently in electronic commerce seem particularly exemplary for this phenomenon and – at the same time – in many respects specific in terms of identifying and aggregating preferences of individuals. Therefore, the main point of reference for the text are rules developed by online intermediary platforms in the sharing economy – which seem to embody many of the peculiarities of fractioned majorities. From this perspective, the matter of fractioned majoritarian defaults merits and necessitates a more comprehensive theoretical account on at least two levels. A more detailed analysis is required regarding its exact nature and variations, in respect of current market phenomena. A deepened analysis is also required in terms of its relation with the existing body of contract law rules – both in terms of legislation, and in terms of pertinent case law.

When creation of norms is the theme, European contract law shares a development that is global, that can be summarised as the advent of a variety of competing rule-setters and that has characterised the last five or six decades. It has moved from one government contract law until the second half of the 20th century to complex governance, which also embraced contract governance structure. At the same time, European contract law is special within this broad global flow – strongly propelled mainly on the two sides of the Atlantic – in that it has added considerable complexity to this already rich picture. It has done so, for instance, with respect to multi-level contract law, optional codification and with a strange body of adjudication of contract law at the federal level, with a strong command from above, namely a relatively activist European Court of Justice (ECJ). This first overall account of the vast picture takes up both the global flow and the added European ‘jewels’. It does so in an order inspired rather by substance than by origin. In other words, global and European developments are not segregated, but rather a substantive logic is followed.

LAW, STATE AND CONTRACT: BETWEEN THE OLD AND THE NEW PICTURE

REGULATORY ‘MONOPOLY’ vs. PRIVATE LAW ‘BEYOND STATE’

The beauty of the theme lies in the change from an old to a new picture. What is perhaps the summa of the ‘old picture’ was described most beautifully in the Ancien Régime, in 1748. The book referred to – dealing with the very concept of law(s) (l’esprit des lois) – contains as its most famous (set of) phrase(s): ‘Mais les juges de la nation ne sont … que la bouche qui prononce les paroles de la loi; des êtres inanimés, qui n’en peuvent modérer ni la force ni la rigueur. C’est donc la partie du corps législatif … [l’]autorité suprême à modérer la loi, en faveur de la loi-même’. All is centred on the sovereign legislature. This may be the ‘old picture’, but it stems from a genius that has also clarified the concept of separation of powers – albeit with a very weak judicial power, still rather an instrument of the other two powers than one on its own merits.