You are here: Home - Insurance - News -

Comparethemarket fined £18m over cheapest price clause

0
Written by:
19/11/2020
Comparethemarket has been fined £17.9m for breaching competition law after it banned insurance providers from offering cheaper prices on rival comparison sites.

The fine comes after the Competition and Markets Authority (CMA) found clauses in contracts with home insurers which breached competition law.

During an investigation, it found that between December 2015 and December 2017, it imposed ‘most favoured nation’ clauses on home insurance providers selling on its platform.

This banned the insurers from offering cheaper prices on other comparison websites which meant Comparethemarket was not undercut elsewhere.

The CMA said this also made it harder for its rivals to “expand and challenge” the company’s already strong market position as competitors weren’t able to beat it on price.

And 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.

As a result, the watchdog said the move was likely to have increased insurance premiums.

It added that in November 2017, two months after the launch of the CMA’s investigation, Comparethemarket contacted the insurers to inform them it would no longer be enforcing the ‘most favoured nation’ clauses.

‘Unacceptable restrictive clauses’

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.”

‘We fundamentally disagree with the conclusions’

A Comparethemarket spokesperson, said: “Comparethemarket.com is disappointed with the CMA’s decision and does not recognise its analysis of the home insurance market. We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options.

“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 six 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.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Privacy Preference Center

Necessary

Advertising

Analytics

Other

Read previous post:
BLOG: The pension disadvantage for female divorcees and how to plan for it

Having a conversation about retirement planning with your spouse will ensure that you’re ready for anything, including divorce.

Close