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Compare the Market Inflated Insurance Prices Fine Overview:
- Who: Price comparison website Compare the Market is hitting back against an £18M fine from the UK’s Competition and Markets Authority (CMA).
- Why: Compare the Market says it does not deserve the fine the CMA gave it for having clauses in its contracts requiring home insurance providers offer their best prices on its website.
- Where: The website serves insurance customers in the UK.
Compare the Market, a popular UK price comparison website is fighting a £17.9 million fine handed down to it from a government watchdog that says the website pushed up home insurance prices for customers.
The UK’s Competition and Markets Authority (CMA) slapped Compare the Market with the fine in 2020, saying the price comparison website had kept home insurance prices artificially high for consumers by creating contracts with insurers that did not allow those insurers to offer better prices on other websites, Law360 reports.
These contract terms are called “most favored nation clauses”—contract provisions that require that a party must receive rights and benefits under the contract that are equal to or more favorable than the rights and benefits received by any other parties.
In this case, Compare the Market signed contracts with home insurance providers that blocked them from offering lower prices on other price comparison websites, the CMA says.
Compare the Market Owner Says No Evidence Consumers Pay Higher Prices
On Nov. 1, an attorney for Compare the Market parent company BGL Group—an insurance and financial services company—hit back, asking the Competition Appeal Tribunal to throw out or reduce the fine.
BGL Group’s lawyer reportedly said the CMA had failed to prove that Compare the Market’s most favored nation clauses had resulted in higher insurance premiums for customers.
He said the website’s contracts with insurers simply gave customers confidence that they would always receive the best deals on Compare the Market, and that it was prudent to shop around.
It was possible that discounts were being offered for home insurance on multiple websites thanks to Compare the Market’s clause, he added, saying the CMA needed to show proof of impact on consumers.
“Because, otherwise, what you’re left with is selective and anecdotal evidence, which the CMA likes to call qualitative evidence,” he told the appeal tribunal.
Meanwhile, the CMA is also taking aim at other industries. In August, it said it had found evidence that Groupon had been stiffing its customers on deserved refunds, offering Groupon “credits” instead. It is demanding Groupon customers get the refunds they are owed.
The news comes as Ryanair announced it would start issuing refunds for canceled flights, after mounting pressure from consumers and an investigation from the CMA
Do you think the contracts Compare the Market had with insurance companies could have kept insurance premiums artificially high? Let us know in the comments!
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