Comparison websites – First consumer-protection sector inquiry by the Federal Cartel Office

On 24 October 2017, the Federal Cartel Office launched a sector inquiry into comparison services on the internet.

This sector inquiry is the first investigation launched by the recently established Consumer Protection Division and is based on new powers granted to the Federal Cartel Office by the 9^th Amendment Package to the German Act against Restraints of Competition (see our report here).

In a press release, the Federal Cartel Office also stated that it will decide by the end of this year whether to launch another sector inquiry in the area of consumer problems in everyday digital life.

What is the focus?

With this new sector inquiry, the Federal Cartel Office aims to find out whether consumer protection regulations are being complied with by comparison websites. The investigation will focus on comparison websites in the areas of travel, insurance, financial services, telecommunications and energy.

The Federal Cartel Office is interested in corporate links between comparison website operators as well as their financing. The sector inquiry will also assess further aspects such as the rankings, reviews, availability and market coverage of the websites.

What should companies expect?

Carrying out a sector inquiry does not mean that there is any concrete suspicion that specific companies have infringed relevant laws. Rather, such an inquiry serves to initially identify any sector-wide deficiencies that may require additional measures in the future.

The Federal Cartel Office is currently selecting      the comparison websites to which requests for information will be addressed. Companies will probably receive these questionnaires by the end of the year and will then have approx. one to two months to respond.

Companies are required to respond to the Federal Cartel Office’s questionnaires, to disclose information on their current financial and economic status, and to provide relevant documentation. Moreover, the Federal Cartel Office may also ask companies to provide internal documents, such as market studies, which contain information on the market situation and competitive conditions.

Experience shows that completing questionnaires for the Federal Cartel Office and identifying and compiling the relevant documents can be a time-consuming affair. Companies should thus take the necessary organisational steps early on to ensure timely completion of the questionnaire.

If information and documents are not provided at all, not provided in full, or provided incompletely or late, the Federal Cartel Office may then fine the undertaking concerned up to €100,000.

When will the results be available?

After analysing the companies’ responses to the questionnaire, the Federal Cartel Office will hold a consultation with the affected business communities on its preliminary findings and will then publish a final report. Judging from past sector inquiries, the investigation may take one to two years.

What will the consequences be?

The Federal Cartel Office’s questionnaire should be completed with diligence and care. Every response may significantly affect the results of the inquiry and thus trigger future administrative or even legislative measures.

Both operators of comparison websites who are approached by the Federal Cartel Office as well as those who are not directly affected should consider reviewing their business practices to make sure they comply with consumer protection regulations.

Of course, it is still too early for companies to change current business models. But companies should still examine whether their business processes and contractual terms and conditions comply with current legislation and case law.