Teal blue graphic

Digital Comparison Tools under the spotlight of the CMA

Background

The CMA has launched a market study into digital comparison tools (DCTs), including price comparison websites and smartphone apps, to assess whether they are functioning well for consumers, business and the economy.

The market study was triggered by the CMA's recent reviews of various sectors, including private motor insurance, retail banking and energy, which highlighted the leading role DCTs can play in increasing price transparency and enabling consumers to make informed choices.

However, recent market investigations have also raised some concerns about potential distortions in competition in these sectors as a result of the way in which DCTs operate.

Scope of the market study

The CMA intends to examine the potential benefits of DCTs, drawing on consumer experiences. The study will also look at the effect of DCTs on competition between suppliers of the services they compare.

The CMA will draw from its recent experience in sectors such as energy, private motor insurance, hotel online booking and payday lending, whilst also applying its focus to four new sectors: home insurance, broadband, credit cards and flights.

Initially, the CMA will assess:

  • consumers' expectations, use and experience of DCTs;
  • impact of DCTs on competition between suppliers listed on DCTs;
  • competition between DCTs; and
  • effectiveness of existing regulatory environment.

Next steps

The CMA now has six months to decide whether it intends to refer the market for a more in-depth investigation. Over the next few months, the CMA will be issuing individual information requests to consumers and businesses to gather a wide range of evidence in order to make its decision.

The impact of the study could be significant – from a more in-depth market review to individual enforcement actions for competition law breaches and potentially regulatory reform.

Implications

DCTs have garnered much attention from competition regulators in recent years, both in the UK and across Europe.

In the UK, whilst the CMA has previously identified the constructive role DCTs can play in improving competition and consumer engagement, in a number of sectors, DCTs have faced criticism.

The CMA now has the opportunity to reflect on how to enhance the positive benefits of DCTs, whilst addressing the issues they pose in relation to competition.

Being the CMA's first multi-sector market study, it is likely that the study will be detailed and time consuming. It will also be interesting to see how the CMA will use its experience in previous work in sectors such as private motor insurance and energy, to draw conclusions in the DCT market study.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.


Insights & events View all