CMA updates on Digital Comparison Tool market study – deciding against a market investigation

The UK competition regulator, the Competition and Markets Authority (CMA), has today released an update on their digital comparison tool (DCT) market study. DCTs cover price comparison websites and apps that customers can use to help them find the best offers in markets such as energy, broadband and credit cards.

Frontier regularly advises clients on these and other regulatory and competition issues.

The CMA’s market study is looking at how to maximise the potential benefits from DCTs, focusing on:

  • ensuring consumers have the confidence and understanding to use DCTs;
  • ensuring DCTs have access to information needed to provide effective comparisons for consumers;
  • understanding the competition between DCTs, and between DCTs and suppliers’ own direct sales channels;
  • ensuring regulation is appropriate, supports good consumer outcomes but does not act as a barrier to entry or innovation.

In all of these areas the CMA has found issues that will be further explored during the remainder of the market study. For example, in relation to consumers the CMA believes many DCTs could be more transparent in their business models, ranking methods, market coverage and how they use personal information.

The CMA highlighted several potential competition issues including some DCTs’ clauses that require suppliers to set prices displayed on the DCT’s platform no higher than those the supplier sets through their own direct sales channel (e.g. the supplier’s website) or on other DCT platforms. The CMA also noted a concern that DCTs may be causing a “hollowing-out” – a focus on price to the exclusion of other product characteristics.

Despite those concerns, the CMA has decided, that no in-depth market investigation is needed to pursue with any actions that address the issues identified.

Antti Lemberg, who leads much of Frontier’s work on this area, said “The CMA’s decision to address the issues without an in-depth market investigation means that DCTs and product providers will avoid a much lengthier regulatory process. At the same time, there are a number of thorny competition issues the CMA has raised and it remains unclear what remedies will be used to resolve them.”

For more information, please contact Saskia Nett on s.nett@frontier-economics.com, or call +44 (0)20 7031 7000.

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Related Sectors:
Retail and consumer
Telecoms
Media
Financial Services
Energy
Related Disciplines:
Competition
Regulation