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November 23, 2020
The CMA has fined ComparetheMarket £17.9 million after it found that clauses used in the company’s contracts with home insurers breached competition law.
The CMA investigation 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, which limited competitive pressures on all home insurers competing on price comparison websites;
- rival comparison sites were restricted in gaining a price advantage over ComparetheMarket, e.g. by lowering their commission fees to encourage those insurers to quote lower prices on their platforms; and
- 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.
To read the CMA’s press release in full and for further information on the case, click here.