Shared Bidding Algorithms and Competition: Evidence from Electricity Markets

Competing firms increasingly delegate market decisions to algorithms supplied by the same third-party providers. We study whether a shared algorithm leads competitors to internalise one another's profits, using data from the Australian National Electricity Market, where batteries' bids are observed at 5-minute frequency and can be linked to an autobidding provider. Bids constructed by the same provider co-move, and do so more strongly after a disclosure reform made the scarcity state easier to observe: the same information that steers batteries towards efficient arbitrage also synchronises the bids of competitors who share a provider. To separate co-movement from joint profit maximisation, we perform a conduct test by estimating each battery's dynamic value of stored energy and reclearing the market under counterfactual bids. We find that batteries forgo profitable dispatch in the evening peak when it would lower the profit of same-provider batteries owned by rival firms. The estimated conduct parameter is close to one. But this effect arises only where a provider's share of near-margin battery capacity exceeds roughly 30%. The identified conduct costs consumers an annualised $5.5 million given the battery fleet from 2025, and concentration analysis based on ownership would treat these batteries as independent competitors and miss the impact of shared autobidding software.