Comparethemarket might revel in being “Simples” for consumers but it seems for most the price comparison site is anything but, after the competition watchdog found it guilty of keeping home insurance costs artificially high, earning the site a £17.9m fine to boot.
The Competition & Markets Authority investigation was sparked by a market study into digital comparison tools and found that between December 2015 and December 2017, the site breached competition law by imposing wide “most favoured nation” clauses on providers of home insurance selling through its platform.
These clauses prohibited home insurers from offering lower prices on other comparison websites and protected Comparethemarket from being undercut elsewhere. They also made it harder for Comparethemarket’s rivals to expand and challenge the company’s already strong market position as other price comparison websites were restricted from beating it on price.
As a result, competition between price comparison websites, and between home insurers selling through these platforms, was restricted. The CMA found that this is likely to have resulted in much higher insurance premiums for consumers.
Slapping the company with a £17.9m penalty, CMA executive director for enforcement Michael Grenfell said: “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.
“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. Today’s action should come as a warning – when we find evidence that the law has been broken, we will not hesitate to step in and protect consumers.”
But Comparethemarket – part of the BGL Group – slammed the decision. A spokesman said: “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.”
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