19 November 2020

An investigation by the Competition and Markets Authority (CMA) said that over a two-year period – December 2015 to December 2017  – ComparetheMarket, the price comparison website breached competition law, fining them £17.9 million.

The company’s contracts  imposed wide ‘most favoured nation’ clauses on home insurance companies, selling via its website, which prohibited insurers advertising more cheaply elsewhere.

The CMA found that this was likely to have resulted in higher insurance premiums for consumers. They also found that it made it difficult for ComparetheMarket’s rivals to compete as they were restricted from beating it on price, which effectively protected their strong market position.

ComparetheMarket’s clauses meant:

  • The insurers bound by the contracts were prohibited from offering cheaper deals on other price comparison websites. As a consequence, this limited competitive pressures on all home insurers competing on price comparison websites.
  • Competitor comparison sites were restricted in gaining a price advantage over ComparetheMarket, for example, by lowering their commission fees to encourage those insurers to quote lower prices on their platforms.
  • Without the clauses, ComparetheMarket itself was subject to be weakened. Without the clauses, it would have had to compete harder to get lower prices from the home insurers, for example by reducing the commission fees it charged.

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

“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.”

The insurance industry also faces alternative serious issues in relation to customer trust and with the upcoming regulations around dual pricing and the ongoing focus from the Financial Conduct Authority (FCA) on customer value, in particular  in light of Covid-19, it has never been more important for insurers to ensure they keep on top of the regulatory agenda.

ComparetheMarket – part of the BGL Group – fundamentally disagreed with the CMA’s findings, with a spokesperson saying: “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.”

Rocio Concha, Director of Policy and Advocacy at Which?, said:  “The actions of ComparetheMarket have fallen well below the standard you’d expect from 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 issuing this large fine.
“Customers should be able to trust that they can find the best deals when using price comparison sites, and any business found to be flouting the rules should be held to account.”

ComparetheMarket has the right to legally challenge the ruling.