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Digital Business Lawyer

CMA launches an investigation into price comparison website

The UK’s Competition and Markets Authority (‘CMA’) published its final report following its year-long market study into the use of price comparison websites and other apps on 26 September 2017, which sets out recommendations for price comparison websites to ensure that the issues identified are addressed, the majority of which are consumer protection related, as well as launching an investigation into how one price comparison website, which is not identified by the CMA, has set up its contracts with insurers, due to suspicions that the use of retail most favoured nation clauses may have resulted in higher prices for home insurance.

“From a competition law perspective, the most notable development is the CMA’s decision to open an investigation into the use of retail most favoured nation clauses by a price comparison website,” said Paul Stone, Partner at Charles Russell Speechlys LLP. “The CMA has considered these clauses in other cases but has never reached an infringement finding. It will be interesting to see whether the case proceeds to a final decision or ends with a case closure or commitments.”

The overview to the final report explains that an increasing number of people use digital comparison tools, a term used to cover price comparison websites and other intermediary services used by consumers to compare products or services from a range of businesses, and that such tools “are mostly a force for good: they make it easier for people to shop around, and improve competition - which is a spur to lower prices, higher quality, innovation and efficiency.” However, the report explains that more can be done to ensure that the benefits are felt as widely as possible and as such the CMA is taking steps and recommending other action by companies, regulators and the Government to make sure that improvements happen.

The CMA’s press release accompanying the final report lists what it deems to be the main recommendations put forward in the report, which includes that all sites should follow the CMA’s ground rules in that they should be clear, accurate, responsible and easy to use; that all sites should be clear about how they make money, how many deals they are displaying and how they are ordering the results; that all sites should be clear on how they protect personal information and how people can control such use; that it should be made as easy as possible for people to make effective comparisons or use different sites; and that all regulators with a stake in this area should work together to ensure people are well protected.

“While the impact of the study will vary by sector, and will also depend on the extent to which companies voluntarily adapt their practice, it is notable that the CMA is combining its wider recommendations with enforcement action,” concludes Becket McGrath, Partner at Cooley (UK) LLP. “The compatibility of most favoured nation clauses with competition law in other contexts has been a hotly-contested issue over recent years and it will be interesting to see how this case develops. It is unclear why only one firm has been singled out for investigation but inevitably other sites that use these clauses will be undertaking their own risk assessments. The CMA is presumably hoping that sites will also be considering their use of other clauses that the CMA has identified as potentially problematic, while not yet justifying investigations.”

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