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CompareTheMarket.com Fined £17.9m Over Breach of Competition Law

CompareTheMarket, a price comparison site, has been fined £17.9m by the Competition and Markets Authority (CMA) for keeping home insurance costs artificially high. The CMA found that clauses in the site’s contracts with home insurers broke competition law.

 

Contract Clauses Reduced Competition & Savings for Customers

The contracts included clauses that kept home insurance providers on the platform from offering lower prices on other comparison sites over a period of 2 years. This kept CompareTheMarket’s prices from being undercut by other comparison sites.

In this way, the comparison site was able to artificially keep home insurance prices high. This kept customers from finding the best deals and benefiting from the savings they would otherwise have had. In other words, customers were not able to find the cheapest prices on home insurance on this platform or on competitors’ sites.

Not only that, but the CMA found that CompareTheMarket also restricted competition between the platform and rivals between December 2015 and December 2017, which resulted in customers paying higher prices. It also kept competitor platforms from expanding.

 

CompareTheMarket’s Reaction to CMA’s Decision

However, CompareTheMarket put out a strongly worded statement that said it was disappointed with the CMA’s decision and did not recognize its analysis of the market.

“We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options,” a spokesman said.

They went on to say, “For 14 years CompareTheMarket and other price comparison websites have revolutionized the way in which consumers shop for their insurance. In the past year alone, we have helped more than 6 million customers save money.

“We will continue to deliver on our mission to drive competition, transparency, and choice that benefits consumers, so our customers get the best deals possible.”

 

Response from Consumer Advocacy Groups

Rocio Concha, director of advocacy and policy at Which?, said, “The actions of CompareTheMarket have fallen well below the standard you’d expect to form a company who claims to be working in the best interest of consumers, so it is positive to see the CMA intervening to protect consumers and issues this large fine.”

Cathryn Culverhouse, an associate at the city law firm DMH Stallard said the fine the CMA imposed is a “great win for both consumers and insurers alike.

“CompareTheMarket’s selling point is that they are working for the consumer and this ruling flies in the face of that belief and will undoubtedly damage their reputation.

“Investigations and fines like these are a warning to all companies that they should be alive to competition laws or they risk being hit with a substantial fine, which can be as high as 10% of its annual worldwide group turnover,” she said.

Michael Grenfell, CMA’s executive director for enforcement, said “Price comparison websites are excellent for consumers. They promote competition between providers, offer choices for customers, and make it easier for consumers to find the best bargains.

“It is therefore unacceptable that CompareTheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites – so limiting the bargains potentially available to consumers.

“Digital markets can yield great benefits for competition, and therefore for consumers. We are determined to secure those benefits, and to ensure that competition is not illegitimately restricted.”

 

 

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