The Competition and Markets Authority (CMA) has launched a market study into digital comparison tools to see how they are working for consumers, business and the economy.
It will study the digital comparison tools (DCTs) which enable consumers to compare products and services on quality as well as price, and help them switch between suppliers. These range from price comparison websites (PCWs) to smartphone apps.
This new study will consider how to maximise the potential benefits of DCTs for consumers, and reduce any barriers to how they work.
It will also consider the concerns sometimes expressed about DCTs. First, whether consumers would benefit from being made more aware of how DCTs earn money, and the impact this might have on the services they offer. And, second, whether arrangements between DCTs and the suppliers that sell through them might restrict competition.
Andrea Coscelli, CMA acting chief executive, said: “Digital comparison tools have played a big part in changing markets for the better, bringing new ways of doing things and forcing businesses to up their game. Consumers have benefited as choice and access to goods and services have grown.
“Since emerging a decade or so ago, such tools have helped to inject significant competition into a number of markets, including private motor insurance. They have made it easier for consumers to engage in many markets. However, they have been more successful in some sectors than others. We want to understand why this is the case and whether more can be done to ensure consumers and businesses can benefit from them more widely.
“Some people have also raised concerns about certain issues, including whether consumers can trust the information that’s available, and the study will look at these issues too.”
The study will address four key themes:
- What consumers expect from DCTs, how they use them and their experiences
- The impact of DCTs on competition between suppliers listed on them
- How effectively DCTs compete with each other
- The effectiveness of existing regulatory approaches to DCTs
Market studies look into whether markets are working well and can lead to a range of outcomes. The CMA must announce within six months whether it intends to refer the market for a more in-depth (phase 2) investigation and must publish its report within 12 months, setting out its findings and the actions (if any) it proposes to take.
The CMA is inviting views on the issues raised by the study by 5pm on 24 October 2016.
