With ComparetheMarket having being fined millions by the CMA, Nicola Sharp of business crime specialists Rahman Ravelli emphasises the need to comply with competition law
ComparetheMarket has been fined £17.9 million by the Competition and Markets Authority for clauses in its contracts that breached competition law.
An investigation by the Competition and Markets Authority (CMA) found that, from December 2015 to December 2017, the price comparison website broke competition law by imposing clauses on home insurance providers selling on its site. These clauses prevented the insurers offering lower prices on other comparison websites.
This strategy ensured ComparetheMarket was not undercut by rival price comparison websites. The clauses also made it difficult for those rival sites to challenge the strong position in the market that ComparetheMarket had established.
As competition between price comparison websites - and between home insurers selling through those sites - was limited as a result of this, the CMA found that ComparetheMarket’s approach was likely to have resulted in higher insurance premiums.
Michael Grenfell, the CMA’s Executive Director for Enforcement, said it was unacceptable that ComparetheMarket used clauses in its contracts to prevent home insurers offering bigger discounts on competing websites, as it limited the favourable deals that could have been available to consumers.
This recent decision should come as a stark warning to others. With price comparison sites being such a useful tool for the public, it is good to see that the CMA is taking steps to clamp down on unfair practices, which are ultimately detrimental to the consumer. This is especially important during these difficult times of pandemic, when many people are looking to reduce the amounts they have to pay for things such as home insurance
It is likely that this case will be followed by further investigations, which may lead to further fines. With fines capable of being up to 10% of worldwide group turnover, this is an issue that digital comparison sites should be taking very seriously.
