CMA launch of market study into digital comparison tools

As trailed in its annual report and recent speeches, the Competition and Markets Authority (CMA) has announced the launch of a competition market study into digital comparison tools – which includes price comparison websites – to see if they are functioning well. A market study is a holistic review of the sector in the UK, which seeks to see if the market is working well for consumers, business and the economy.

This review was triggered by the in-depth probes of sectors such as private motor insurance, retail banking and energy, which highlighted the importance of these types of tools in the decision-making of consumers in a broad variety of sectors. Specifically, they play a “powerful role” in helping consumers switch. Switching being the best way to enable active competition between providers.

The CMA said that: “[s]ince 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.”

The CMA wants, at least initially, to look at four “key themes”:

• what consumers expect from DCTs, how they use them and their experiences
• the impact of DCTs on competition between suppliers listed on them
• how effectively DCTs compete with each other
• the effectiveness of existing regulatory approaches to DCTs

The CMA today published a “statement of scope” in relation to the study (responses to it due by 24 October 2017) and will gather information from the market during the course of this year and early 2017. It expects to publish interim findings by 28 March 2017 and must make a decision on this study by 28 September 2017. The range of possible outcomes include: a clean bill of health; actions which improve the quality and accessibility of information to consumers; encouraging businesses in the market to self-regulate; making recommendations to the government to change regulations or public policy; taking competition or consumer law enforcement action; and making a reference for a more in-depth (phase 2) market investigation, or accepting formal undertakings in lieu of a reference.

The CMA’s case page can be found at: https://www.gov.uk/cma-cases/digital-comparison-tools-market-study