On Friday 28 November, the Australian Competition & Consumer Commission (ACCC) issued a report on the comparator website industry in Australia. The aim of the report is to provide industry, consumer groups and regulators with a better understanding of the comparator website industry in Australia and its potential impact on competition and consumer welfare.
In preparing the report, the ACCC consulted with comparator website operators in a range of industries including private health insurance, energy and telecommunications as well as with regulators, service providers, consumer groups and industry associations. The report shows that the ACCC recognises that there are both consumer and competition benefits which flow from comparator websites. However, the ACCC is concerned that comparator websites do not always comply with the competition and consumer protection laws.
This article focuses on the key consumer protection issues identified by the ACCC as arising from these websites. These key issues are relevant not only to comparator websites but to all companies that engage in any form of comparative advertising.
So what are the consumer benefits?
On the positive side, the ACCC noted in its report that comparator websites can assist consumers by explaining and comparing complex products and services in simple terms. This enables consumers to make a more informed choice and also makes it easier for consumers to research and choose which product or service is appropriate for them.
The ACCC also considered that there was some anecdotal evidence which suggested that comparator websites may place downward pressure on prices and foster product innovation.
But what are the challenges?
The ACCC identified a number of challenges for comparator websites. Many of the challenges faced by comparator websites are the same challenges that have always faced companies wanting to do comparative advertising. These challenges relate to ensuring that:
- the website makes clear the nature and extent of the comparison provided. In particular, it is important to make clear if the website does not compare all the products or services available,
- the benefits asserted to arise from using the comparator website, in particular the savings achieved by using the comparator website, are accurate,
- the product or service information for each product or service being compared is accurate and current, and
- the comparator website discloses the nature and extent of its commercial relationships, as these may affect the website’s ability to provide impartial and unbiased recommendations to consumers.
Early next year, the ACCC will publish best practice guidelines to assist comparator website operators and businesses to comply with the competition and consumer protection laws. The ACCC will also provide consumer guidance on how to check that they are comparing 'like with like' when using comparator websites.