Out-Law News 1 min. read

'Digital comparison tools' under scrutiny by UK regulator


The UK's Competition and Markets Authority (CMA) has opened a new market study into price comparison websites and other "digital comparison tools", such as some smartphone apps.

The CMA said the study will look to "maximise the potential benefits" consumers can gain from using digital comparison tools as well as "reduce any barriers to how they work".

The study will address a range of different themes, from consumer expectations and experiences using digital comparison tools, the impact the tools have on competition between suppliers listed on them, how good the competition is between different comparison tools and whether existing "regulatory approaches" to the tools are effective.

Andrea Coscelli, CMA acting chief executive, said: "Since emerging a decade or so ago, [digital comparison] 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," he said.

According to the CMA, the study will look at whether businesses behind digital comparison tools should be required to make consumers more aware of how they make money and the extent to which this impacts on the services they offer. It said it would look at whether arrangements between digital comparison tools and companies providing services via those tools "might restrict competition".

The CMA has defined digital comparison tools as "web-based, app-based or other digital intermediary services used by consumers to compare and/or switch between a range of products or services from a range of businesses". It said they "may allow consumers to compare price, product characteristics or various measures of quality" and "typically do not enter into the primary contract with consumers".

A CMA market study can lead to a number of potential outcomes, including possible competition or consumer enforcement action or a more in-depth market investigation. The regulator has six months to decide whether it intends to refer the digital comparison tools market for such an investigation. The CMA must set out the findings from its market study and any proposed actions in a report within a year of opening its study.

The CMA had promised to scrutinise the activities of price comparison websites in more detail in its annual plan for 2016/17.

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