Black Friday - Perplexity of pricing and promotions

24 Nov 2017

On 21 April 2015, Which? lodged its first ever super-complaint against the grocery sector for misleading and confusing pricing practices. As part of it’s investigation Which? submitted a comprehensive dossier on the subject to the Competition and Markets Authority (CMA) which highlighted the complexities around pricing promotions and the impact this has on consumers.

CMA had 90 days to respond to the super-complaint during which time it gathered information from retailers, manufacturers, consumers and advice bodies. The CMA investigation found some examples of pricing and promotional practices that “have the potential to confuse or mislead consumers and which could be in breach of consumer law”. However, the CMA found that these problems were not widespread across the whole grocery sector and that generally retailers are taking compliance seriously to avoid such problems occurring. The CMA now plans to work with businesses to cut out promotional practices which could mislead consumers. If flagrant breaches of consumer laws are found, enforcement action will be taken.

The Which? dossier (amongst other things) examined four particular practices which make it difficult for a consumer to understand the actual value of a product or promotion and which could be misleading:

  1. The use of a higher “was” price where the item has been available for longer at a lower price.

For example:

Supermarket A sold Brand A kitchen rolls for 52 days at the “higher price of £2.50” and then on offer for 92 days at “was £2.50 but now £2.25”

Supermarket B increased the price of strawberries to £2.99 for a week before selling them on offer at £2.00 for six weeks.

  1. Product prices increase on multi-buys.

For example:

Supermarket A increased the regular price of its pasta from £1 to £1.56 as it went on to a two for £3 multi-buy and then returning the price to £1 once the multi-buy ended. The price of the pasta actually increased 50p per pack.

Supermarket B increased the regular price of its yoghurts from £2 to £2.65 as it went on to a 2 for £5 multi-buy. The price of the yoghurts actually increased 50p per pack.

  1. Seasonal offers where the higher price only applied out of season.

For example:

Brand A Easter Egg was sold at £10 in Supermarkets A and B in February.  It was then on offer at £9 and £7 from March onwards (Easter being at the end of March).

Brand B Easter Egg was advertised at £8.50 for just 11 days in January but then was sold at £5.50 for 51 days.

  1. Larger packs which offer “better value” but where the unit price works out more expensive.

For example:

Supermarket A sold 12 rolls of Brand A toilet paper for more per roll than a four pack of Brand A toilet rolls despite the larger pack being described as “great value”.

Supermarket B sold four cans of sweetcorn for £2 (was £2.33) but six cans were more expensive at £3.46 despite the larger pack being described as “special value”.

Pricing promotions and comparisons can be a complicated area for traders as there is a lot to take into consideration. As highlighted in the examples above, the length of time a product was sold at a particular price is crucial, as is the availability of the product at that price, in order for the promotion not to be misleading. If traders want consumers to trust them, they need to ensure their offers and prices are understood every time.

Traders must comply with the Consumer Protection from Unfair Trading Regulations 2008 and the Cap Code or could find themselves being investigated by Trading Standards and/or  the Advertising Standards Authority. Furthermore, if a trader compares competing goods (i.e. his goods against those of a competitor) in relation to price, this will be a comparative advert which must comply with the Business Protection from Misleading Marketing Regulations 2008 or it could give rise to a claim for trade mark infringement.

The CMA has recommended that the Department for Business, Innovation and Skills (BIS) publishes best practice guidelines on the legibility of unit prices, and looks at ways to simplify and clarify legislation, including how the law requires items to be unit-priced when they are on promotion in accordance with the Price Making Order 2004. However, this will take some time.

If you have any questions regarding pricing promotions or any other advertising related issue, please contact:

Further reading

To whom does TUPE apply?

An individual’s employment status and the effect that has on their rights and on the rights and obligations of the person who uses their services, is an issue that's likely to remain.
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The consumer power shift - CMA reforms on the horizon

Incoming reforms are set to increase the CMA's reach. Jay Barnett explains what this means for businesses and consumers
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The consumer power shift - CMA reforms on the horizon

Incoming reforms are set to increase the CMA's reach. Jay Barnett explains what this means for businesses and consumers
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The Rise and Rise of Fixed Costs in Litigation

Changes to the way litigation claims are run are on the horizon. Simon Elcock explains the growing significance of fixed costs.
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