Supermarkets vs. super-complaint – the results are in

Following a 90 day investigation, the Competition and Markets Authority (CMA) has responded to a super-complaint by Which? in relation to pricing and promotional practices in the groceries sector. Which? submitted the super-complaint on 21 April 2015, accusing retailers of misleading consumers through the use of multi-buy promotions, smaller package sizes and deceptive sales offers.

The CMA’s investigation brought up several issues, most notably with unit pricing, where it considered that more could be done to reduce the level of complexity often present in order to make it a useful comparison tool for consumers. It has therefore asked the Department for Business, Innovation and Skills (BIS) to improve the uniformity and legibility of unit pricing by producing best practice guidelines, and reviewing legislation and guidance. The CMA has also published short guidance on the area, aimed at reducing confusion amongst consumers. These clarifications would also, in the CMA’s opinion, help consumers understand varying pack sizes and their use in promotions, another tactic that it felt was confusing to the public.

Further, the CMA found that retailers use ‘now’ prices as special offers for inappropriately long periods when compared to ‘was’ prices. Price rises prior to volume promotions were of particular concern. Following Tesco’s £300,000 fine in 2013 for such practices, the CMA has recognised that this is a serious issue in the sector. It therefore recommended that Trading Standards issues guidance on the characteristics of a genuine retail price, and provides good practice on price changes before or during volume promotions and the appropriate use of end dates for promotions.

The various new guidelines will be just that – guidelines for the industry which may not have the intended effect. However, the ASA will still have an important role to play, particularly as the super-complaint has brought these issues to the forefront of consumers’ minds. Supermarkets will need to comply with the CAP Codes and the BIS Pricing Practices Guide to avoid upheld complaints. Further, the report emphasised that in individual cases, where there is evidence of a breach in consumer protection law, this could result in enforcement action.

However, the CMA considered that, while these practices were unclear and could confuse or mislead consumers, this was sufficiently not widespread in the industry to take action. It concluded that retailers generally take compliance seriously in the attempt to avoid misleading customers. For example, price matching was not found to cause any significant consumer harm. As a result, the CMA concluded there was no need to take action on this practice, and instead pointed to the continued importance of the ASA in dealing with any complaints which may arise as a result of it.

The fact that harsher remedies were not used by the CMA may reflect the fact that grocery chains have recently tended to move away from price promotions and toward stable lower prices, at least in part due to the rapid growth in market share of retailers such as Aldi and Lidl. Nevertheless, pricing remains a complex area where considerable care needs to be taken to avoid breaching the CAP Codes and the Consumer Protection from Unfair Trading Regulations. It is to be hoped that the guidance being issued by the CMA, Trading Standards and BIS helps to clarify the complexities, rather than adding to them.