UK competition watchdog highlights poor pricing practices by retailers following 'super-complaint'

The Competition and Markets Authority (CMA) has ruled out a formal investigation of supermarket pricing practices in response to a 'super-complaint' by consumer body Which?; although it has warned that individual breaches of consumer protection law could lead to enforcement action. It has recommended that that government look at ways to simplify and clarify laws governing promotions, particularly in relation to how items should be 'unit-priced' when on promotion.

Which?, one of five designated bodies permitted by law to submit a 'super-complaint', said in April that it had compiled a "dossier" of evidence of poor pricing practices by supermarkets. These included 'larger pack better value' offers where the individual products were proportionately more expensive, and examples of products being sold at a 'special' price for longer than they were sold at the higher price.

Nisha Arora, senior director in the CMA's consumer division, said that Which's submission had "presented us with information that demanded closer inspection".

"We have found that, whilst supermarkets want to comply with the law and shoppers enjoy a wide range of choices, with an estimated 40% of grocery spending being on items on promotion, there are still areas of poor practice that could confuse or mislead shoppers. So we are recommending further action to improve compliance and ensure that shoppers have clear, accurate information," she said.

The CMA has 90 days to respond to super-complaints brought by the designated bodies. Over the investigation period, it gathered its own information from retailers, manufacturers, consumers and advice bodies, and also commissioned third-party data and surveys on pricing practices, it said.

In its report, the CMA said that retailers were generally taking their obligations not to mislead consumers "seriously". However, it said that it would work with affected businesses to cut out the sort of practices that were potentially misleading, citing the example of 'was/now' promotions where goods are available at a discounted price for longer than the higher price applied.

The Chartered Trading Standards Institute, the member body for trading standards professionals, is currently reviewing the government-backed Pricing Practices Guide (PPG), which was published by the Department for Business, Innovation and Skills (BIS) in 2010. Although the PPG has no legal force, it does recommend good practices that retailers can refer to when giving consumers information about pricing in various situations. The CMA said that the Chartered Trading Standards Institute should consider clarifying how consumer protection legislation applies to certain promotional practices as part of this review.

BIS should also publish best practice guidance on the use of unit pricing, as well as look at ways to simplify and clarify the legislation, the CMA said. Unit pricing is designed to allow consumers to compare the cost of similar products by reference to the price of a specific volume of the item; for example, the amount that the product costs per 100g. However, Which? claimed that some retailers were using different measurements as part of this practice, for example listing the price of one product per 100ml while a similar product was priced per 100g.

In the meantime, the CMA has published a simple guide for consumers to help them make better use of unit pricing.

Responding to the CMA's report, the British Retail Consortium (BRC) welcomed the watchdog's support for the ongoing review of the PPG as the best means of tackling promotional pricing issues.

"It is very clear that the allegations contained in the super-complaint were blown out of all proportion and that the CMA recognises supermarkets take compliance seriously," said Tom Ironside, the CMA's director of business and regulation. "Our members will continue to work closely on the Pricing Practices Guide to ensure transparency and fair treatment for our customers."