Shares in Moneysupermarket.com (MONY) slumped on fears that it could be fined for curbing competition in the energy market. Industry regulator Ofgem has asked the price comparison specialist to provide information as part of an investigation into whether two or more companies providing a supporting service to the energy industry have breached competition law.
Shares in online property portal Zoopla (ZPLA) also slid 5 per cent. That reflected its recent takeover of utilities-focused price comparison site uSwitch, which received its own information request from Ofgem in April. Zoopla has set aside £10m for potential penalties, as Ofgem can fine companies up to a tenth of their turnover for the year preceding an investigation. Moneysupermarket could face a fine of up to £24.8m - or 4.5p a share - based on its revenue in 2014.
Price comparison websites generally improve market transparency, enabling consumers to compare and switch suppliers with minimal hassle. That makes them unlikely culprits in a price-fixing or collusion scheme. But media reports indicate that Ofgem has not contacted industry peers Confused.com, Go Compare and Energy Helpline.
Ofgem launched an in-depth investigation into the UK energy market in June 2014, tasking the Competition and Markets Authority with ensuring an adequate level of competition. The regulators think the dominance of the 'big six' energy companies may be discouraging competition and limiting consumers' switching between suppliers. Their goal is to maintain pressure on prices, encourage investment in the sector and promote innovation and customer service improvements. The CMA expects to present its findings in December.
Nonetheless, growing numbers of consumers are logging onto Moneysupermarket.com to switch energy suppliers. Consumers' sustained focus on energy prices, together with the group's exclusive, market-leading tariffs, drove a 141 per cent rise in home services revenue to £12.3m in the first quarter of 2015. The division - which accounted for 9 per cent of group sales in 2014 - has also benefited from the group's Cheap Energy Club, which alerts members when they can save a certain amount on their energy bill by changing provider.
Meanwhile, Zoopla expects its integration of uSwitch to drive more customers to its advertisers and increase their revenue opportunities. It expects the business, which has grown annual sales by an average of a fifth over the past three years, to significantly boost its earnings in the year to September 2016.
