Sector inquiry on comparison websites - Bundeskartellamt wants to terminate infringements of consumer rights and demands new competences

Today the Bundeskartellamt has published the final report on its inquiry into comparison websites.

Andreas Mundt, President of the Bundeskartellamt: “Comparison websites help consumers find their way around the internet along with better and cheaper results. However, we also detected consumer-unfriendly tricks of some comparison websites. Consumers should look at how rankings are achieved and check whether they are based on a large number of offers. Consumers should not allow themselves to be put under pressure by alleged shortages or exclusive offers which might turn out not to be short or exclusive after all. We have compiled valuable advice for dealing with comparison websites in our final report and in a video.”

In October 2017 the Bundeskartellamt started the sector inquiry on comparison websites based on its new competencies in the area of consumer protection, which it has held since mid-2017. The Bundeskartellamt can carry out investigations in the area of consumer protection. However, it does not yet have the power to eliminate the violations of rights it detects by official decree.

Andreas Mundt: “Civil lawsuits and regulation alone are no effective remedy for such problems. Due to difficulties of proof and the lack of a broad impact, the opportunities to enforce consumer protection under civil law are limited. Regulation is static and often unsuitable to fully grasp all case constellations. Selectively enhancing the Bundeskartellamt’s competencies would enable the authority to enforce existing consumer protection legislation in a quick and targeted manner.”

The sector inquiry revealed seven different problem areas. The results vary according to sector and website:

• While in some sectors, the degree of the websites’ market coverage is very high, in particular in the insurance and hotel industries, some key providers are not included in the comparison. There are only a few websites which handle this piece of key information in a way that is sufficiently transparent for the consumer, e.g. by providing a negative list.
• When it comes to hotel rankings, the amount of commission paid by the different hotels is one of the factors influencing a hotel’s position in the ranking. Consumers may find it misleading if the websites give the impression that their rankings are equivalent to recommendations, even if there is some superficial or hidden information on the fact that the amount of commissions paid has an impact on the ranking results.
• In the energy sector in particular, some websites leave out certain offers in their initial rankings, either because they may be to the disadvantage of consumers, or because the website does not receive a commission from the providers. Consumers are not informed if the latter is the case.
• Comparison websites for energy and telecommunications tariffs often display selected offers above the actual ranking (“position 0”). In some cases the providers pay for this position, and the consumers are not informed about the fact that the offers displayed at this position are in fact advertisements.
• Sometimes the websites indicate shortages, benefits or exclusive offers in a misleading manner that may put consumers under pressure or raise false expectations, especially in the travel sector, but also in other industries.
• In the sectors under review, most ratings were exclusively given by users who had successfully concluded a transaction via the website, which one the one hand makes it more difficult to enter fake reviews, but on the other hand also reduces the range of ratings.
• Comparison websites of all sectors cooperate in terms of databases and calculator tools. It is true that such cooperations can extend consumers’ opportunities to compare offers, but they can also mislead consumers into interpreting identical results on several allegedly independent websites as a confirmation.

In some cases consumers are misled, transparency obligations are violated or advertisements are not indicated as such.

The Bundeskartellamt received and evaluated approx. 30 statements from comparison websites, providers (hotels, insurances, etc.), authorities and consumers in response to the consultation paper (cf. press release of 12 December 2018) which was published in December 2018. The statements referred to all sectors and problem areas, with one of the key areas being the influence of commission amounts on hotel rankings. The general findings and assessments that the Bundeskartellamt had outlined in its consultation paper remained largely undisputed. However, many website providers emphasised the particularities and benefits of their own websites, underlining that consumers were sufficiently informed about the operational principles of the portal. Some website providers implemented changes to their websites in response to the Bundeskartellamt’s criticism. Some website providers warned against subjecting online sales channels to stricter regulations than comparable offline channels. Representatives of the sectors compared in turn criticised that the websites’ objectivity and transparency were insufficient, which would mislead consumers into making the wrong decisions. Several transaction providers and consumers also commented on further problem areas for the Bundeskartellamt to investigate. Among these problem areas, those involving aspects of antitrust law were directly handed over to the antitrust section of the Bundeskartellamt.

Starting the sector inquiry in December 2017, the Bundeskartellamt investigated first around 150 and then, in a second round of investigations, the most relevant 36 comparison websites from the sectors of travel, energy, insurances, telecommunications and finances. The problem areas investigated were cooperations between the various websites, market coverage of the websites, how the rankings are formed, other factors influencing the consumers’ choice and the handling of user ratings.

Click here for the full report on the sector inquiry on comparison websites (available in German only).

A video providing helpful hints for consumers is available (in German only) here.