CMA Fines The Meerkats £17.9m On Pricing Issue

An investigation by the Competition and Markets Authority (CMA) has concluded that, between December 2015 and December 2017, the price comparison website ComparetheMarket breached competition law by imposing wide ‘most favoured nation’ clauses on providers of home insurance selling through its platform.

These clauses prohibited the 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 higher insurance premiums.

ComparetheMarket’s clauses meant:

  • The insurers bound by the contracts were prohibited from offering cheaper deals on other price comparison websites. In turn, this limited competitive pressures on all home insurers competing on price comparison websites.
  • Rival 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.
  • The competitive pressures ComparetheMarket itself was subject to were 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.

Michael Grenfell, the CMA’s Executive Director for Enforcement, 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.

Further information on this investigation can be found on the case page.

IE Comment; 

If consumers shop around for the best deals they have to believe that there is a level playing field for all insurers and MGAs using that platform. But in an era when public sector contracts are being dished out to chums, and random chancers online who fancy a PPE supplier gig, it is a bit rich to fine any company for a breach like this. The hypocrisy and corruption in the public sector is ten times worse than any price-fixing going in in the private sector. The UK government procurement system is utterly rotten; from the NHS, new cycle lanes, apartment and retail mall projects, to a humble District Council. 

Nobody can defend price-fixing, but it seems some price-fixing attracts a more stern response than others.

Which? Magazine Comment;

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.”
Altus Comment by Steve Whitfield, Senior Consultant;

“The significant fine from the CMA for Compare The Market brings back into focus the importance of keeping on top of the ever changing regulatory landscape that we see across the whole of the Insurance marketplace. The Insurance industry is already facing serious issues in relation to customer trust and with the upcoming regulations around dual pricing and the ongoing focus from the FCA on customer value (especially in light of the current Covid-19 situation), it has never been more important for Insurance firms to ensure they keep on top of the regulatory agenda.”


About alastair walker 6139 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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