Out-Law / Your Daily Need-To-Know

Price comparison websites 'forcing businesses to up their game', says CMA

Out-Law News | 28 Sep 2017 | 9:47 am | 3 min. read

The widespread use of price comparison websites and other 'digital comparison tools' (DCTs) is helping consumers to shop around and forcing businesses to "up their game" to hold on to customers, the UK's competition watchdog has found.

However, sites must do more to ensure that the information they present is clear, accurate, responsible and easy to use, the Competition and Markets Authority (CMA) said in its final report into DCTs. It has published a set of "clear ground rules" which sites should use, covering how they should communicate their plans to use consumers' personal data and display price, product description and other important information.

The CMA also announced that it has opened a Competition Act investigation into one PCW around its use of wide 'most favoured nation' (MFN), or parity, clauses with home insurers. MFNs are clauses that specify that a product may not be sold more cheaply on other websites, with 'wide' clauses such as those under investigation also restricting the sale of products through a supplier's own channels.

The watchdog urged all other firms to review their contracts to ensure that they do not contain clauses that could restrict competition.

"Our study has found that most people in the UK have used a comparison site at least once so it is vital that everyone gets the benefits they deserve," said CMA chief executive Andrea Coscelli.

"The good news is that more than 90% of the people we surveyed were very or fairly satisfied with the sites they used. But we have found that improvements are needed to help people get even better deals. We have set out ground rules for how sites should behave, as well as being clear on how regulators can ensure people have a better experience online. We are also taking enforcement action where we suspect the law may have been broken," he said.

The CMA began its study of DCTs, which it defines as digital intermediaries used by consumers to compare, and potentially to switch or purchase products and services, in September 2016. Its study focused particularly on the use of DCTs by consumers shopping for car and home insurance, energy, broadband, flights and credit cards, although the final report also touched on other sectors.

The watchdog found a "mostly positive picture" of UK consumers' use of and attitudes to DCTs, as well as the ways DCTs treat people. However, it said that it had some concerns about whether these services were clear enough with consumers about how they make money and how they used consumers' personal data, as well as concerns about how accessible the various websites were to more vulnerable consumers.

In its report, the CMA recommended that DCTs adopt the 'CARE' principles in their communications with customers, meaning 'clear, accurate, responsible and easy to use'. This would help them to comply with their duties under consumer protection law, as well as supporting consumer trust, it said. In particular, DCTs should be careful to explain how they make money, how much of the market they cover and how they rank the results that they present, as well as explaining any ownership links with the suppliers that they show.

DCTs must also make it clear to consumers how they protect their personal information and make it clear to them how they can control its use, particularly ahead of the implementation of the General Data Protection Regulation (GDPR) in May 2018, the CMA said. They should also take steps to ensure that their websites and apps comply with their obligations under relevant equality law, and seek to work with relevant consumer and charitable organisations to ensure that they are meeting the needs of vulnerable consumers.

The report also contains recommendations for sector regulators, in particular the Financial Conduct Authority (FCA). In particular, the FCA should consider whether and how it would be possible to make it easier for consumers to get quotes from multiple DCTs. The CMA has stressed that consumers should always seek quotes from multiple CDTs if they want to get the best deal, something that they are already doing in two thirds of cases, according to its research.

The CMA said that it would keep the use of various contract terms by DCTs and their suppliers under review due to concerns about potential breaches of competition law. Its report raised concerns about the use of MFNs and certain contract terms that limit bidding for online search terms, as well as the use of 'non-resolicitation' agreements preventing DCTs from re-contacting consumers who have purchased a supplier's product from them in respect of the same product type for a certain period.

It will work with the FCA's competition division on its investigation into the use of wide MFNs by one price comparison website, and take a decision on whether to proceed with its investigation or to close it by March 2018, it said.