Comparethemarket.com, the price comparison site known for its meerkat adverts, has been condemned by regulators for prohibitive clauses that may have broken competition law and denied people better insurance deals.
The site could eventually be fined millions of pounds after the Competition and Markets Authority said its investigation had “provisionally found it had broken the law by preventing home insurers from offering lower prices elsewhere”. It said its findings were provisional and it would make a final decision after considering Comparethemarket’s response.
The CMA found “most favoured nation” clauses in Comparethemarket’s contracts with insurance companies which effectively banned them from selling their home insurance at cheaper prices on rival websites.
It is the latest action by regulators to rein back big internet platforms – such as hotel booking sites – that promise “best prices”, largely by banning the provider from offering discounts on rival sites.
The CMA chief executive, Andrea Coscelli, said: “Our investigation has provisionally found that Comparethemarket has broken the law by preventing home insurers from offering lower prices elsewhere. This could result in people paying higher premiums than they need to.”
It is understood that Comparethemarket contacted home insurers in late 2017 to tell them the contracts would no longer be enforced, but the CMA said it remains concerned that the effects of the clauses could continue.
In a statement, Comparethemarket said: “We are disappointed by the CMA’s provisional findings. We will carefully review the evidence once we have access to it, and look forward to working with the CMA over the coming months to ensure a satisfactory outcome.”
Comparethemarket is the only major comparison site that the CMA has rebuked for this practice, with similar clauses not found at rival providers.
The CMA added that the practice not only meant that rivals were unable to offer discounts, but also that it was more likely to lead to higher commission rates paid to the sites, with the costs being passed on to consumers.
While Comparethemarket is the trading name of the comparison site, the CMA’s formal “statement of objections” has been sent to its owners, BGL (Holdings) Limited, BGL Group Limited, and BISL Limited.
The latest financial results for BGL (Holdings) posted at Companies House show that it made a profit of £14.5m on turnover of £132.3m in 2017. The parent company of Peterborough-based BGL is the South African-based insurance group BHL, majority-owned by family trusts of Douw Steyn, the founder of BGL and one of the richest people in the insurance business.
More than 20m UK households have home insurance and more than 60% of new policies are found on price comparison sites.
