Comparethemarket fined £17.9m by competition watchdog
The competition watchdog has imposed a £17.9m fine on the price comparison site Comparethemarket.com after it found that clauses in its contracts with home insurers broke competition law.
The Competition and Markets Authority (CMA) found that Comparethemarket prohibited home insurers on its platform from offering lower prices on other comparison websites over two years, ensuring it was not undercut elsewhere.
This meant the comparison site, known for its meerkat adverts, kept some prices for home insurance artificially high and denied customers the best deals.
The firm’s behaviour was found to have restricted competition between Comparethemarket and its rivals between December 2015 and December 2017, which was likely to have resulted in customers paying higher insurance premiums, the CMA said.
The regulator first condemned the site in November 2018 for breaching competition law.
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.”
Comparethemarket said it fundamentally disagreed with the ruling and that it would carefully examine the detailed rationale behind the decision. It said it would consider all of its options.
A spokeswoman for the company said: “Comparethemarket.com is disappointed with the CMA’s decision and does not recognise its analysis of the home insurance market.
“For 14 years Comparethemarket.com and the other price comparison websites have revolutionised the way in which consumers shop for their insurance. In the past year alone, we have helped more than 6 million customers save money.
“We will continue to deliver on our mission to drive competition, transparency and choice that benefits consumers, so our customers get the best deals possible.”
Rocio Concha, director of advocacy and policy 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.
Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk
The fine the CMA imposed is a “great win for both consumers and insurers alike”, said Cathryn Culverhouse, an associate at the city law firm DMH Stallard.
“Comparethemarket’s selling point is that they are working for the consumer and this ruling flies in the face of that belief and will undoubtedly damage their reputation.
“Investigations and fines like these are a warning to all companies that they should be alive to competition laws or they risk being hit with a substantial fine, which can be as high as 10% of its annual worldwide group turnover,” she said.
