On March 28, 2017, the U.K. Competition and Markets Authority (“CMA”) published an update on its Market Study into digital comparison tools (“DCTs”).
The update sets out the preliminary findings and areas of focus for the second part of the Market Study. The CMA found that there were hundreds of DCTs the UK, led by five large providers: Comparethemarket, Confused, GoCompare, Moneysupermaket, and uSwitch. DCTs benefit competition and consumers because they facilitate competition between suppliers who advertise on DCTs, lower switching and transaction costs for consumers, increase consumer engagement, reduce acquisition costs for suppliers, and lower barriers to entry and expansion for new and small suppliers. The CMA has also identified possible competition concerns from the use of most-favoured nation provisions and restrictions on how DCTs can advertise their services. It is considering whether the practice of “hollowing out” (prominently advertising a low-price product that excludes features that might otherwise be included) is misleading or beneficial to consumers. There is a patchwork of inconsistent regulation covering different sectors, which can be confusing for DCTs, suppliers and consumers. The CMA aims to tackle these issues through remedies and enforcement action, but without the need for an in-depth Market Investigation. This alert memorandum summarises the CMA’s preliminary findings and the remedies it intends to consider.