The CMA, the UK’s main competition regulator, launched an investigation on 26th September 2017 into home insurance price comparison website, compare the market .com, over its use of most favoured nation clauses and whether their use constituted an infringement of the Chapter I prohibition of the Competition Act 1998 and/or Article 101 of the TFEU.
This investigation follows the publication of a final report in the CMA’s market study into digital comparison tools. Over the last year the CMA has been investigating how price comparison websites help consumers in the UK buy everything from home insurance to energy. Following its report it has set out ground rules for how these sites should behave and how consumers can have a better online experience.
Most favoured nation clauses guarantee price comparison websites the best deals from the suppliers concerned. The CMA has previously had wide experience of MFNs in the hotel on line booking, private car insurance and live auction platform sectors. It has taken its decision to launch an investigation into the Meerkat branded website in light of that experience. As the investigation relates to financial services the CMA will liaise closely with its co-competition regulator the financial conduct authority during the course of the investigation.
The CMA is concerned that the way compare the market .com has set up deals with the insurers and how that may actually result in customers paying higher home insurance premiums rather than getting a good deal. If insurers were not constrained by the effect of these wide MFN clauses they would be free to offer some competing sites better rates
The CMA has preliminary concerns that many consumers necessarily associate price comparison sites with boosting competition and giving them a good deal. But in certain cases this impression can be misleading. If consumers know one site always has the best deals it will stop them shopping around and using other competing sites. This in turn makes it harder for those sites to effectively compete in the market. Therefore a site with considerable presence and market power in the market can effectively foreclosure other smaller competitors in whole or in part from the market. This is the damage MFNs can cause and the CMA is determined to open up markets for the benefit of consumers in appropriate cases.
The CMA has not reached a view on whether there is sufficient evidence of infringement for it to issue a statement of objections. The CMA estimates that it will take a decision on whether or not to proceed with or close this investigation in March 2018.
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