Competition authority to look at price comparison sites

The UK’s competition watchdog has launched a market study into price comparison websites to investigate how they generate a profit and whether the arrangements they make with suppliers might restrict competition.

The review, announced by the Competition and Markets Authority (CMA) on Thursday, will also include other digital comparison tools such as smartphone apps.

Amongst other issues, the CMA will consider whether sites such as Compare the Market, Money Supermarket, Go Compare and Uswitch really do help consumers get the best deals.

The review will focus on four key issues:

1. What consumers expect from digital comparison tools (DCTs), how they use them and their experiences.

2. The impact of DCTs on competition between suppliers listed on them.

3. How effectively DCTs compete with each other.

4. The effectiveness of existing regulatory approaches to DCTs.

As part of the study, the regulator will explore the role of DCTs in the markets for broadband, home insurance, credit cards and flights.

Andrea Coscelli, acting chief executive of the CMA, commented:

“Digital comparison tools have played a big part in changing markets for the better, bringing new ways of doing things and forcing businesses to up their game. Consumers have benefited as choice and access to goods and services have grown.

“Since emerging a decade or so ago, such tools have helped to inject significant competition into a number of markets, including private motor insurance. They have made it easier for consumers to engage in many markets. However, they have been more successful in some sectors than others. We want to understand why this is the case and whether more can be done to ensure consumers and businesses can benefit from them more widely.

“Some people have also raised concerns about certain issues, including whether consumers can trust the information that’s available, and the study will look at these issues too.”

The review was welcomed by Citizens Advice, whose chief executive, Gillian Guy, said:

“Many people assume price comparison websites are independent and that when they use them they will be presented with the cheapest deal in the market – but this is not always the case. Many services take commission from the companies they display. We think it should be much more clear to consumers how these websites select their deals.”

The CMA will announce within six months whether it intends to refer the market for a more in-depth investigation and will publish its report within 12 months, setting out its findings and the actions (if any) it proposes to take.