Energy price comparison websites being investigated for anti-competitive behaviour
First published by Author on September 05, 2016 in the following categories: Latest and tagged with cartels
Third party intermediaries / price comparison websites are being investigated by the CMA (Competition and Markets Authority) for suspected anti-competitive behaviour.
Ofgem had originally been investigating the issue which has now been formally transferred to the CMA to complete the enquiries. The investigation is in to whether there has been a breach of the Competition Act by companies allegedly agreeing to behaviours relating to the use of keyword search advertising online.
The allegations
The allegation is that parties have agreed not to bid for particular keyword search terms for online advertising, and have done the same for negative matching, which is where an advertiser indicates to a search engine that it doesn’t want their website to appear in the search result when certain keywords are used.
This behaviour, if found to be true, could seriously distort competition in the market. For example, if half of the best keywords available were only used by one company, and the other company used the other half, they’re literally sharing the market without having to compete.
For example, if Energy Comparison Website A paid for and used the keywords “cheap energy” and Energy Comparison Website B opted for negative matching for the same term, you will immediately be presented with Energy Comparison Website A when searching with this term. Energy Comparison Website B could then use the keywords “low cost energy” with Energy Comparison Website A opting for that to be a negative match for them.
If they’re doing that, they barely need to compete with each other and are essentially sharing the market segment. Without any healthy dose of competition, they may not have to bother competing for prices and deals that the others couldn’t offer.
What happens if it’s proven?
If the outcome of the CMA investigation finds that the companies involved have been agreeing to distort competition in the market in such ways, they could face serious fines, and people affected may be due compensation.
We’ll try and keep you posted on this one. Competition claims generally stem from cartels, and we will be happy to help anyone who has been affected should the CMA investigation find a cartel has been in effect.