October 14, 2022

UK Competition Appeal Tribunal sets aside £17.9 million judgment

On August 8, 2022, the UK Competition Appeal Tribunal issued a judgment setting aside a decision of the Competition and Markets Authority dated November 19, 2020.  The CMA decision in Price comparison website:  use of most favoured nation clauses found that BGL (Holdings) Limited and others (collectively denominated “Compare the Market”) had infringed Article 101 of the Treaty on the Functioning of the European Union and Chapter 1 of the Competition Act 1998.  The infringements resulted from Compare the Market’s imposition of obligations under the Wide Most Favoured Nation Clauses (“WMFN”) on 32 insurance providers.  WMFN clauses imposed on home insurers by price comparison websites operate to prevent the insurers from listing lower prices on their own websites and on other price comparison websites than they have listed on the price comparison website imposing the WMFN clause.  A price comparison website, as defined by the Tribunal, is a digital platform that introduces consumers to providers of various products, and provides a comparison of services to consumers.  The CMA imposed a £17,910,062 financial penalty on Compare the Market, finding that WMFN clauses restrict or distort competition, and restrict the ability of rival price comparison websites to expand and thrive.

On appeal, Compare the Market argued successfully that the CMA’s market definition was flawed, and that the CMA had failed to demonstrate that the WMFN clauses actually had an anti-competitive effect. 

The Tribunal found that the CMA had adopted an incorrect definition of the consumer side of the market, had erroneously adopted an approach to market definition that was not outcome neutral, failed to apply the demand suitability test properly, failed to weigh the importance of other channels for the purchase of home insurance, and incorrectly included Narrow Most Favoured Nation clauses in its market definition assessment.  The Tribunal also determined that the CMA’s conclusion regarding the anti-competitive effect of WMFN clauses was not supported by quantitative evidence.

The Tribunal rejected one of Compare the Market’s grounds of appeal, agreeing with the CMA’s approach to consider collectively rather than individually the 32 WMFN clauses’ effect on competition.

Judgment | Notice