Comparethemarket.com reportedly under investigation over deals with insurers to push up policy prices

Regulators highlighted deals between one comparison site and insurers which prevent the firms placing cheaper offers elsewhere on the web and may restrict competition

'We are also taking enforcement action where we suspect the law may have been broken,' the CMA said (Comparethemarket.com)

One of the UK’s biggest price comparison sites is to be investigated by the competition watchdog for allegedly pushing up the price of home insurance policies.

In a damning report on the sector, the Competition and Markets Authority on Tuesday highlighted deals between one comparison site and insurers which prevent the firms placing cheaper offers elsewhere on the web.

This may unfairly limit competition, resulting in higher prices for consumers, the CMA said. That site is understood to be comparethemarket.com, though the watchdog did not name the site directly.

The CMA will now investigate the agreements, known as most-favoured nation clauses. The first stage of the probe will last until March next year, when the watchdog will decide whether or not to continue its inquiries. The CMA has the power to levy fines of up to 10 per cent of turnover if it finds competition law has been breached.

Andrea Coscelli, the CMA’s chief executive, said that use of comparison sites is widespread and therefore it is “vital” that they provide the best value for consumers.

Most people are happy with the service comparison sites provide but improvements are needed, Mr Coscelli said.

“We have set out ground rules for how sites should behave, as well as being clear on how regulators can ensure people have a better experience online.

“We are also taking enforcement action where we suspect the law may have been broken.”

A spokesperson for comparethemarket.com said: “We welcome the CMA's conclusions that digital comparison tools are a force for good which lower prices for consumers and inject competition into markets.

“We operate some simple contractual arrangements with home insurers to ensure that our customers always get the lowest available price. We welcome the opportunity to discuss this further with the CMA.”

James Bridge, head of conduct regulation at industry body, the Association of British Insurers, said that insurance was a “very competitive market” but added: “We would like to see the rules tightened on price comparison websites using contracts which restrict the prices insurers can offer to customers elsewhere – known as Most Favoured Nation clauses.

“It is good to see the CMA investigating this issue further and we welcome their new ground rules which should improve consistency of standards.”