The Competition and Markets Authority (CMA) has responded today to the first super-complaint to be brought in relation to the groceries sector. The complaint was raised on 21 April 2015 by Which?, the largest independent consumer body in Europe, who has spent the last seven years investigating suspect supermarket pricing practices. The CMA’s response is significant as it reprimands commercial pricing practices used in many other industries. The super-complaint raised the four main issues discussed below:
- Firstly, Which? alleged that supermarket price matching schemes mislead consumers into believing that there is no benefit to “shopping around,” and into trusting that they are paying the lowest price on the market. In reality, this may not be the case. The main issue lies in the fact that each supermarket creates its own rules concerning which products will be compared; and it is by no means all. Sainsbury’s, for example, includes only branded products in its comparison tool.
- Secondly, Which? highlighted a deceptive trend whereby pack sizes are reduced without any corresponding price reduction. For example; a 200g pack of Philadelphia Light Soft Cheese was initially sold for £1.84, and when the pack size was reduced to 180g the price was actually increased to £1.87 (Asda, 2015).
- Thirdly, Which? assessed that inconsistent unit pricing causes confusion to consumers. For example; one brand of sauce may be priced per 100ml whilst another will be per 100g, or one brand of bananas may be priced per kg whilst another will be per piece. This does allow for a straight-forward price comparison.
- Fourthly, Which? asserted many “special offers” confuse consumers into thinking that they are getting a better deal than they really are. For example;
• Asda sold Innocent Pure Fruit Smoothie (750ml) for £2 and then increased the price to £2.78 when they put the product on a multi-buy offer of “2 for £5” – making the product 50p more expensive when it was “on offer” (2013);
• Tesco advertised Green Giant sweetcorn multi-packs of six as “special value” whilst the smaller multi-packs of four represented better value per can (2014);
• Sainsbury’s increased the price of Carex Aloe Vera & Eucalyptus Moisturising Antibacterial Handwash (250ml) to £1.80 for 7 days before putting it “on offer” for 84 days at 90p (2013).
In their report, the CMA found little evidence to support the allegations that price-matching schemes cause significant consumer harm. The CMA simply recommends that retailers ensure that “the information they provide about their price match schemes is as clear and transparent as possible in terms and conditions, online FAQs and in store.”
The concerns raised by Which? in relation to reduced pack sizes was also not shared by the CMA. It has concluded that “the information currently being presented to consumers (i.e. the size of the product and its price) is sufficient when a pack size changes, taking account of the relevant legislative requirements.” The CMA only recommends that “manufacturers and retailers should continue to be alert to particular circumstances in which pack size changes could potentially lead to consumer harm.”
The CMA was, however, in agreement with Which? that the current inconsistent approach to unit pricing causes confusion to consumers. The CMA seeks to ameliorate this issue with a number of recommendations. Firstly, the department for Business, Innovation and Skills (BIS) should produce “Best Practice Guidelines” to encourage improved legibility and consistency in unit pricing. Secondly, the legislation and guidance on how the unit pricing rules apply to promotions specifically should be reviewed. Thirdly, BIS should seek to clarify and simplify unit pricing rules with the Expert Working Group. Fourthly, retailers should implement all resulting changes as soon as practicable. Consumer bodies, including Which?, should do more to educate consumers on how to use unit prices effectively.
The CMA also confirmed that, in relation to special offers, they have “found examples of pricing and promotional practices that have the potential to confuse or mislead consumers and which could be in breach of consumer law.” Whilst reiterating its finding that misleading special offers are relatively rare, the CMA confirms that it will take further action with the businesses concerned, including potential enforcement action where appropriate. It also commits to supporting the Trading Standards Services in their future monitoring, compliance and enforcement work. Additionally, it recommends that the Chartered Trading Standards Institute (CTSI) should produce guidance clarifying how the Consumer Protection from Unfair Trading Regulations 2008 apply to promotional practices.
Despite the CMA not confirming all of the issues raised in the super-complaint, Which? has responded to its findings with seeming satisfaction. Executive director Richard Lloyd today stated that “the CMA’s report confirms what our research over many years has repeatedly highlighted: there are hundreds of misleading offers on the shelves every day that do not comply with the rules.” Which? is now pushing for supermarkets “to be put on notice to clean up their pricing practices or face legal action” and for “urgent enforcement action from the CMA.”