Reed Smith Client Alerts

On 11 April 2019, the German Federal Cartel Office (FCO) published the final report on its sector inquiry into comparison websites. The FCO focused on the areas of energy, telecommunications, insurance, finance and travel, which are particularly relevant for consumers. The FCO takes the view that in some cases consumers are being misled, that transparency obligations are not fully complied with and that advertisements are not always identified as such by the relevant website provider. As the FCO does not yet have any enforcement powers in the area of consumer rights, it makes its case for enforcement powers similar to those existing in competition law enforcement.

Authors: Michaela Westrup

The FCO identifies seven areas of concern in its sector inquiry report:

  1. In some sectors, such as the insurance sector, websites do not always include all important service providers in a comparison and only a few comparison websites deal with this key information transparently e.g., by providing a negative list.
  2. In the hotel sector, the amount of commission paid by hotels is one factor that influences their position in a ranking. The FCO takes the view that consumers must be better informed about the influence of commissions on the ranking results.
  3. In the energy sector, some portals do not list certain offers, either because the energy providers are not prepared to pay a commission or because the offer could be disadvantageous for consumers. In the FCO’s view, consumers are not properly informed about this.
  4. In the energy and telecommunications sectors, some comparison websites list offers in a ‘position 0’ at the top of the ranking in return for payment from the service provider without indicating that these offers are paid advertisements.
  5. Portals’ references to shortages, advantages or exclusive offers are sometimes misleading. In the travel sector in particular but also in other sectors, this messaging creates a sense of urgency that may pressure consumers into purchasing or booking.
  6. Most of the reviews on the websites are given by consumers who successfully concluded a transaction on the website. On the one hand, that prevents fake reviews; on the other hand, it reduces the range of ratings.
  7. Some comparison websites cooperate with competing providers on the use of databases and search algorithms. Such cooperation can expand the consumer’s opportunities to compare offers, but can also lead consumers to interpret identical results on several supposedly independent websites as a confirmation.