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A major product-comparison site amalgamation is unopposed given only “a small minority” of consumers use them, the ACCC has explained.
The Australian Competition and Consumer Commission (ACCC) has said it it won’t oppose Compare the Market’s acquisition of competitor comparison site iSelect.
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Innovation Holdings Australia Pty Ltd (IHA) currently owns approximately 26 per cent of shares in iSelect, which it acquired through a series of acquisitions beginning in 2018. IHA is now proposing to acquire the remaining shares in iSelect.
It already owns Compare the Market through its related bodies corporate.
Compare the Market and iSelect offer online comparison services to consumers for various insurance, energy, and financial products and services.
Retailers of these products and services can use comparison services as a retail distribution channel to reach consumers, the regulator outlined.
Comparator websites generally provide services with no direct cost to consumers, while receiving commissions or fees from retailers for their inclusion in search results or for when a consumer completes a sale via referral from the comparator.
No harm done as brokers are channel of choice
The statement released on Friday (2 December), explained the ACCC will not oppose IHA’s proposed acquisition of iSelect Limited, even in the context of some concerns raised about reduced competition in the comparison website sector.
When announcing its decision not to oppose the merger of the two companies, the ACCC flagged that “only a small minority” of consumers buy their insurance, energy, and financial products through comparison sites, preferring instead to access finance products via brokers.
The regulator explained that it had heard concerns from some market participants about the Compare the Market and iSelect deal in terms of competiton, but that this was unlikely.
“The ACCC considers it unlikely that IHA acquiring the remaining shares in iSelect will substantially lessen competition in any market,” it stated.
“One of the major factors for this view is that only a small minority of consumers buy insurance, energy, and financial products through Compare the Market and iSelect.
“Most consumers purchase these products through other distribution channels such as brokers or direct from the retailer.
“Further, following the proposed acquisition, Compare the Market and iSelect would continue to face significant competition from other comparison sites, and retailers using alternative means to attract consumers.”
As ACCC commissioner, Liza Carver, explained: “The online comparison services industry is very dynamic and so the threat of new entry or expansion by a competitor is likely to constrain the merged firm.
“Consumers can readily purchase insurance, financial and energy products directly from the supplier, and shop around using multiple competing comparator sites including government comparison websites.”
The ACCC encouraged consumers to shop around to find the best deal. While comparison websites can provide a useful service for consumers, those websites may not always compare all the offers or products and services available in the market.
[Related: Broker market share breaks 70% milestone]
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