The competition watchdog is to investigate suspected market rigging by energy price comparison websites.
The investigation will examine whether websites agreed not to compete with each other when consumers searched on Google for the best deals.
The Competition and Markets Authority said: “The CMA is investigating a suspected breach of competition law by some price comparison websites that offer energy tariff comparisons in relation to paid online search advertising.”
But in a bizarre twist, the initial investigation by the industry regulator, Ofgem, has been switched to the CMA after Ofgem uncovered earlier dealings by its own staff with the comparison sites that could have called into question the impartiality of the investigation.
Ofgem said it found that two or more of the comparison sites had, since 2010, “been parties to an agreement or concerted practice relating to bidding and/or negative matching for search advertising which have as their object or effect the prevention, restriction or distortion of competition.”
These practices included “agreements not to compete in relation to particular search terms used for the purposes of online search advertising”.
Negative matching is when an advertiser indicates to a search engine operator such as Google that it does not want its website to appear in the search results for specific keywords.
Ofgem has not named the parties it is investigating in relation to the suspected collusion. But in a statement, comparison site uSwitch said: “We have supported Ofgem with information in relation to this matter and will provide the CMA with any further information, if asked. This case is currently at an information gathering phase as the Ofgem decision notice specifies. We have no further detail on the nature of the case.”
The issue was handed to the CMA after an initial investigation by the industry regulator Ofgem was at risk of being compromised by actions of Ofgem staff.
Ofgem found its staff had, before the formal investigation begun, been in contact with the websites now under investigation, encouraging them to change their behaviour when it came to buying advertising on search engines such as Google. Once the investigation began, Ofgem realised its earlier activities could call into question the regulator’s own impartiality.
In a statement, Ofgem said: “Ofgem itself procured search advertising during the period under investigation in the course of publishing advice and information to promote the interests of consumers, one of our statutory functions.
“Ofgem became aware of communications between Ofgem staff and representatives of some of the parties under investigation encouraging those parties to change their behaviour in relation to bidding on search advertising keywords relevant to Ofgem. These communications took place before the investigation was opened.
“Ofgem considers that this could delay the progress of the case, for example if parties were to call into question Ofgem’s impartiality in continuing with the case.”
The CMA said that it will decide in August whether to proceed with the investigation or to close it.
It was revealed in June last year that Moneysupermarket and uSwitch had been asked by Ofgem to provide information regarding a separate investigation into commission rates they charge energy suppliers, but in March this year the investigation was closed with no further action.
The CMA’s wider investigation into energy markets – which critics fear has bowed to pressure from the “big six” energy providers – will issue its final report on Friday 24 June, the day after the EU referendum.
