The Competition and Markets Authority has fined ComparetheMarket £17.9m after it found that clauses used in the company’s contracts with home insurers breached competition law.

Between December 2015 and December 2017, the price comparison website imposed ‘wide most favoured nation’ clauses on providers of home insurance selling through its platform.

These clauses prohibited home insurance companies from offering lower prices on other comparison websites, which meant that ComparetheMarket could not be undercut elsewhere.

Another consequence was that it became harder for rivals to expand and challenge the company’s already strong market position as they were restricted from beating ComparetheMarket on price.

As a result, competition between price comparison websites, and between home insurers selling through these platforms, was restricted. The CMA found this is likely to have resulted in higher insurance premiums.

It also meant that rival comparison sites were restricted in gaining a price advantage over ComparetheMarket, for example, by lowering their commission fees to encourage insurers to quote lower prices.

The CMA’s executive director for enforcement Michael Grenfell says: “Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains.

“It is therefore unacceptable that ComparetheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites.

“Digital markets can yield great benefits for competition, and therefore for consumers. We are determined to secure those benefits, and to ensure that competition is not illegitimately restricted.

“Today’s action should come as a warning – when we find evidence that the law has been broken, we will not hesitate to step in and protect consumers.”

On 30 November 2017, two months after the launch of the CMA’s investigation, ComparetheMarket contacted insurers to inform them it would no longer be enforcing the ‘wide most favoured nation’ clauses.

Firms can be fined up to 10 per cent of their annual worldwide group turnover, taking into account a range of factors including the seriousness of the infringement and any mitigating or aggravating factors.