“CMA’s Energy Price Comparison investigation given the red light” – The investigation into companies agreeing not to bid for the same search terms has closed, says the CMA
First published by Admin on November 11, 2016 in the following categories: Latest and tagged with cma
Back in October last year, the Competition Markets Authority (CMA) initiated an investigation into energy price comparison websites as a result of suspected anti-competitive behaviour.
Now, the CMA has decided to close the case on ‘administrative priority grounds’.
The allegation
The investigation arose after there were allegations that some price comparison websites offering energy tariff deals in relation to paid online search advertising breached the Competition Act 1998 as well as Article 101 of the Treaty on the Functioning of the European Union (TFEU).
The suspected breach, had it have been proved, may have been against domestic and European laws.
The alleged anti-competitive behaviour was that companies had allegedly agreed not to bid for particular keyword search terms for online advertising on price comparison websites. This could hinder competition, as one set of ‘keywords’ could belong to one company, and the other set of ‘keywords’ to another. This means companies could, in theory, easily share the market without having to compete in certain areas against each other.
Competition Act and the TFEU
The Competition Act, in particular section 2 (dubbed the ‘Chapter I prohibition’), provides that companies and organisations should be prohibited from making agreements that may prevent, restrict, or distort competition. In effect, this is so that trading in the U.K. can be an ‘open’ one, and smaller businesses can actually compete with the bigger organisations; as well as providing a ‘real choice’ for consumers.
The TFEU also provides a similar kind of rule-enforcing as the Competition Act does. It prohibits agreements for undertakings, sharing markets,and fixed prices; things that can all limit market trading, and give some companies a competitive advantage / disadvantage, and so on.
CMA’s responsibility
The Enterprise and Regulatory Reform Act 2013 established the CMA as the U.K.’s economy-wide ‘watchdog’ who are tasked with ensuring that healthy competition leads to markets that benefit consumers. At the end of the day, they are looking to see whether there is fair competition, and that it would provide consumers with a wide-range of choice allowing them to make their own well-informed decisions.
In order to protect consumers, the CMA launches investigations and market studies into the allegations. If there is a competition problem, the CMA can enforce remedies. Therefore, if the energy market was found to lack enough fair competition, the CMA could legally enforce remedies, which businesses and organisations would then have to follow.
Fines can also be imposed on both businesses and organisations.
Investigation closed
The CMA has closed its investigation, although this doesn’t necessarily mean there was definitely no breach.
The CMA continues to recognise the importance of price comparison websites in the energy market, as well as the disastrous effect it would have on consumers if there was a lack of effective competition.
Here, price comparison websites, digital comparison tools, and suppliers advertised on the websites should seek to restrain from future agreements that restrict bidding on specific terms and they should make a satisfactory attempt to be compliant with the law. Although the CMA has decided to close the investigation, businesses are still encouraged to contact them if they are aware of any agreements affecting the bidding in paid online search advertising.
There may still be a case
Although the investigation has been given the red light, if companies have been making these anti-competitive agreements, individuals may be able to claim against them for distorting competition.