Bulletins | October 18, 2017

Price comparison websites – 8 out of 10, but could do better

From the consumer standpoint, price comparison websites save time and effort by simplifying the tiresome task of shopping around for the best deal. But they can also be very good news from the standpoint of competition law, because (to quote from the detailed market study published on the subject last month by the Competition and Markets Authority (CMA)) they ” …. make suppliers compete harder to provide lower prices and better choices to consumers”; and anything that makes suppliers “compete harder” is very likely to be intrinsically pro-competitive.

It is therefore no big surprise that the conclusions of this study have, in general, given a fairly clean bill of health to the workings of what the CMA calls “digital comparison tools” (DCTs), a term that covers not only price comparison websites but also other intermediary services used by consumers to compare – and potentially switch or purchase – products or services from a range of businesses.

But regulators would not be regulators without a grumble here, or a “could do better” there. In view of the relentlessly-approaching date when the General Data Protection Regulation is due to come into force, one very predictable observation made in the study is that the operators of digital comparison tools could and should be doing more on the data protection front. And certain types of contractual clauses that crop up in the deals between suppliers and DCT-operators – non-brand bidding agreements, negative agreements and non-resolicitation clauses, for example – have caused the CMA’s brow to furrow.

However, the part of the study that has hit the headlines relates to the “strong concerns” expressed by the regulator about “Most Favoured Nation” clauses (MFNs). In this context, MFNs have nothing to do with ‘nations’; instead, they purport to prevent suppliers from offering better prices on one price comparison website than on another, a practice that is prima facie anti-competitive. In that respect the watchdog has certainly bared its teeth, for the CMA has announced that it is investigating suspected breaches of both UK and EU competition law in the use of certain MFN clauses by a price comparison website in relation to home insurance products; that website has not been named by the CMA, but has been widely reported in the press to be Compare the Market.com.

We should know by the spring whether the CMA has decided to proceed with the investigation, or to close it. In the meantime, the results of the study demonstrate that if one lifts the lid on even an apparently pro-competitive market sector, unpleasant things can sometimes crawl out of the woodwork.

For further information please contact Jonathan Cornthwaite at jcornthwaite@wedlakebell.com or Richard Stebbing at rstebbing@wedlakebell.com.