The Competition and Markets Authority (CMA) has fined ComparetheMarket £17.9 million after an investigation discovered that clauses used in the business’s contracts with home insurers breached competition law.
The CMA found that between December 2015 and December 2017, ComparetheMarket imposed wide ‘most favoured nation’ clauses on providers of home insurance selling throughout its platform. These clauses barred the home insurers from being able to offer lower prices on alternative comparison sites, as well as making it harder for the price comparison website’s rivals to challenge the company’s strong market position. In addition, the competitive pressures facing ComparetheMarket were weakened by the clauses as, without them, it would have had to compete harder to get lower prices from home insurers.
The CMA highlighted that, as a result of this, competition between price comparison websites, and between home insurers selling through these platforms, was restricted which is likely to have resulted in higher insurance premiums.
Commenting on the action, Michael Grenfell, executive director for enforcement at the CMA, noted that price comparison websites are excellent for consumers and promote competition and offer choice while making it easier for them to find the best bargains. Therefore, he said, it is unacceptable that ComparetheMarket, which has led the home insurance price comparison market for several years, used clauses which led to the limiting of the bargains potentially available to consumers.
“Digital markets can yield great benefits for competition, and therefore for consumers,” Grenfell said. “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.”
