united-kingdom competition
Does an &quot;Own building insurance fee&quot; breach anti-competition law in the UK
<p>Reading this <a href="https://www.moneysupermarket.com/mortgages/mortgage-charges-explained/" rel="nofollow noreferrer">Money Supermarket article</a> about various fees associated with buying a house, I came across an &quot;Own Building Insurance Fee&quot;, which is described as follows.</p>
<blockquote>
<p>This is charged by your mortgage lender for checking you have taken out building insurance if you choose not to buy it from them. The fees are fairly small – around £25 to £50 each.</p>
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<p>The assesment of &quot;fairly small&quot; seems to be relative to other fees as it still seems to me like quite a lot for what I imagine is essentially glancing at a document. I can't escape the feeling that the primary purpose of the fee is to encourage homeowners to buy insurance from the mortgage provider, by financially punishing them for buying elsewhere.</p>
<p>Is this not a breach of anti-competition law?</p>

<p>It's only a breach of competition law if performed by a business with a &quot;dominant position in a market&quot;. If the business does have such dominance, it appears to be a violation of <a href="https://www.legislation.gov.uk/ukpga/1998/41/section/18" rel="nofollow noreferrer">section 18(2)(d) of the Competition Act 1998</a>:</p>
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<p>(2) Conduct may, in particular, constitute such an abuse if it consists in—</p>
<p>...</p>
<p>(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.</p>
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<p>Most of the time, dominance can be considered as holding 50% or more of the market, but has also been considered to be as low as 40%. Looking at <a href="https://www.statista.com/statistics/886906/leading-mortgage-lenders-in-the-united-kingdom-outstanding/" rel="nofollow noreferrer">statistics on mortgage lending market share from 2018</a>, nobody appears to have a dominant market position so arguably no competition law breach has been committed.</p>
<p>It could also be a cartel offence under the same Act if every mortgage company agreed (informally or formally) to charge such a fee, but not if everyone is simply independently copying each other absent any specific evidence of agreement.</p>
