ComparetheMarket has been fined £17.9m after the regulator found the company had breached competition law.
The Competition and Markets Authority’s investigation concluded that the comparison website had imposed wide “most favoured nation” clauses on providers selling home insurance.
These clauses stopped the home insurers from offering lower prices on other comparison websites and protected ComparetheMarket from being undercut elsewhere.
They also made it more difficult for the website’s rivals to expand and challenge its dominance, as they were prevented from beating it on price.
The breaches took place between December 2015 and December 2017 and the regulator said they restricted competition between the comparison website, likely resulting in higher insurance premiums.
The CMA also said that, had it not been for the clauses, ComparetheMarket would have had to compete for lower prices from the home insurers, for example by reducing its commission.
Michael Grenfell, the CMA’s executive director for enforcement, said: “Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains.
“It is therefore unacceptable that ComparetheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites – so limiting the bargains potentially available to consumers.
“Digital markets can yield great benefits for competition, and therefore for consumers. We are determined to secure those benefits, and to ensure that competition is not illegitimately restricted.
“Today’s action should come as a warning when we find evidence that the law has been broken, we will not hesitate to step in and protect consumers.”
A spokeswoman for ComparetheMarket said: “CompareTheMarket.com is disappointed with the CMA’s decision and does not recognise its analysis of the home insurance market.
“We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options.
“For 14 years CompareTheMarket.com and the other price comparison websites have revolutionised the way in which consumers shop for their insurance.
“In the past year alone, we have helped more than six million customers save money.
“We will continue to deliver on our mission to drive competition, transparency and choice that benefits consumers, so our customers get the best deals possible.”