Asda singled out by CMA

The Competition and Markets Authority (CMA), the UK’s competition regulator, today published a press release commenting on discussions which have taken place with supermarkets in light of the Which? super-complaint made in April 2015.

Background

In its initial response to Which?’s complaint last year the CMA was generally relatively positive about the state of the advertising and pricing practices used by the grocery market. However it did find evidence that supermarkets were misleading consumers with promotions, and found some examples that “could be in breach of consumer law” which it stated it would address directly with the relevant parties.

CMA’s Announcement

Whilst the CMA today advised that it had met with a number of supermarkets and asked them to modify their pricing and promotional practices, Asda was the only supermarket expressly named and to have been asked for a written commitment to change the way it operates ‘was/now’ and multi-buy deals. Examples published by Which? of Asda’s misleading pricing in its initial complaint included Robinsons Orange Fruit Squash (1 litre), which was increased to £1.49 or £1.59 individually while on a “2 for £2.50” promotion several times during 2014, but cost £1 for most of the year. The CMA stated that the revised business rules Asda is implementing will ensure that:

• ‘now’ prices will not be advertised for longer than the ‘was’ price applied, ensuring they are a meaningful comparison;
• multi-buy offers will represent better value than a single product before the offer; and
• multi-buy offers will not be immediately followed by ‘was/now’ promotions, so it will be easier for shoppers to tell what is a good offer.

Asda has committed to make the changes by August this year, and the CMA will check how those changes are working six months later. Asda is one of the few supermarkets who have not already started phasing out multi-buy deals following reports that the CMA was planning to crack down on these in February earlier this year.

Comment

It is important to note that the CMA has not made any findings against Asda. However by singling Asda out for criticism by publically naming it in its release the CMA has shown that it is taking a more active approach after being criticised in some quarters for not acting strongly enough when it published its initial report in 2015. The grocery industry is highly competitive and the negative publicity caused by the CMA’s announcement is likely to be keenly felt by Asda, which appears to be struggling and in February posted its worst ever quarterly sales figures. It is also significant that many supermarkets pre-emptively began phasing out multi-buy deals earlier this year in response to rumours of a CMA crack-down suggesting that the CMA is now being taken seriously as an enforcement and regulatory body.