| Link(s): | Price comparison website: use of most favoured nation clauses – GOV.UK (www.gov.uk) Judgment | Competition Appeal Tribunal (catribunal.org.uk) CAT Judgment (catribunal.org.uk) |
Context
The Competition Appeal Tribunal has published a summary and a full judgement overturning a decision by the Competition and Markets Authority which was set to fine Compare the Market £17.9m for breaking competition rules on the use of Most Favoured Nation clauses. The CAT unanimously agreed with all the challenges to the decision outlined by Compare The Market and, as such, elected to set aside the original ruling.
Key points to note
The Tribunal’s ruling was fairly damning of the evidence put forward by the CMA, finding the CMA’s decision to be materially wrong in relation to how it arrived at a market definition, and in failing to establish that wMFNs (Wide Most Favoured Nation Clauses) had the anti-competitive effects articulated in its decision.
- An online statement posted by the CAT stated its view that a great deal of the CMA’s analysis as to the alleged anti-competitive effects of wMFNs was perhaps little more than theory or assertion, with no significant reference to quantitative evidence (rather, the decision was principally based on qualitative evidence) and it was extremely difficult for the Tribunal, and Compare The Market, to identify the evidential basis for the effects stated to exist in the decision.
- The Tribunal found that:
- there was no reliable evidence upon which to conclude the existence of any adverse effect of wMFNs on either premiums or commissions,
- the evidence put forward by the CMA was anecdotal at best and lacked depth and consistency with the CMA’s theory of harm, it was not possible for Compare The Market, and the Tribunal, to test the evidence relied upon in any way, and
- in relation to promotional discounts, the Tribunal did not consider that the competitive structure of the market was harmed, even potentially, through an effect on promotional discounts.”
Next actions
None – for information and awareness, but this ruling might have consequences for the MFN clause ban that was included within the CMA’s Private Motor Insurance Market Investigation Order 2015.