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Competition and Markets Authority fines - competition law expert comments

Price comparison website has been fined £17.9 million by the UK Competition and Markets Authority for breach of UK Competition Law. Here, Dr Kathryn McMahon of Warwick Law School explains the issues behind the case - and why this ruling is a break from previous practice by the CMA.

Dr McMahon said: "On November 19th, 2020 the UK Competition and Markets Authority (CMA) fined BGL, the owner of the comparison price website, £17.9 million for breach of UK Competition Law. The decision follows a broader investigation by the CMA into the competitive practices of price comparison websites.

"The CMA found that between 1 December 2015 and 1 December 2017 entered into agreements with a number of home insurance companies that prevented them from quoting lower prices for home insurance on rival price comparison websites. This practice is known as the use of ‘wide’ ‘most favoured nation’ clauses (MFN), a term originating in international trade agreements where a nation agrees that it will treat the goods of one nation as favourably as those of other nations. The agreements meant that could not be undercut by prices quoted by these insurers on rival price comparison websites. The CMA is concerned that this conduct has led to higher prices for consumers, as a result of fewer opportunities for competition on price and commission between home insurers and less effective competition and obstacles to new entrants in the price comparison website market.

", supported by an effective marketing campaign and high brand recognition, is the market leader with over 50% of the price comparison website market. Home insurance companies therefore feel that they must offer their insurance products to the public through the platform. The CMA found that sales subject to these agreements accounted for 40% of all home insurance contracts. Insurance companies complained of practices used to monitor and enforce the terms of the agreement. If they tried to offer discounts or promotion, through other websites, they feared being delisted. The CMA found that If they did offer a lower price on another website they had to fund an equivalent price reduction on

"The decision is significant because these MFN clauses have been investigated by the CMA in a number of sectors in the past but this is the first time a fine has been imposed. The CMA, for example, has investigated the online hotel sector where both 'wide’ MFN clauses but also ‘narrow’ clauses have been imposed. ‘Narrow’ MFNs demand that where a hotel is listed with a platform it agrees not to publish a lower price on its own hotel website. The CMA has tended to permit ‘narrow’ MFN clauses and entered into so-called ‘commitments’ with firms who have implemented ‘wide’ MFNs requiring them to cease or alter their behaviour.

"The decision to progress to a fine in this case is a departure from previous practice and brings the UK more in line with the somewhat harsher treatment of both ‘narrow’ and ‘wide’ MFN clauses in some EU Member States. It signifies the seriousness with which the CMA treats this conduct and the importance it places on the on-line market sector. It is further recognition of the growing market power of these dominant digital platforms, dominance which permits them to resort to tactics different to normal competitive behaviour.

" has stated that it will vigorously defend its conduct. It can be argued that these practices generate efficiencies and prevent free-riding on the investments made by these digital platforms (for both ‘narrow’ and ‘wide’ MFNs). They will also argue that these platforms provide consumer benefits by providing a search and comparison facility and contributing to consumer confidence that prices quoted will genuinely be the lowest in the market.

"The CMA can fine a firm up to 10% of its global turnover. BGL may also be liable to damages actions by consumers where they can establish that they may have paid a higher price for insurance under these agreements. In the last few years consumer damages actions have been facilitated in the UK by the introduction of so-called ‘opt-out’ class actions."

20 November 2020


Peter Thorley
Media Relations Manager (Warwick Medical School and Department of Physics)


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