Who: Homebase Ltd, B&Q, Advertising Standards Authority (“ASA”)
Where: UK
When: 5 November 2014
Law stated as at: 2 December 2014
What happened:
This recent ASA adjudication related to 16 Homebase price reduction ads on products such as kitchens and bathroom. The various ads featured claims such as “60% off Kitchen Units Selection Bathrooms Schreiber Fitted Bedrooms ends 5 March. Plus an extra 20% off even existing offers when you spend £150 or more ends 17 December.”
The complaints centred around CAP Code Rule 3.1 that, “marketing communications must not materially mislead or be likely to do so.” B&Q argued that the price reductions were misleading and did not make it clear to consumers:
- when the higher reference prices for the kitchens had been charged;
- that different promotions ran consecutively without the normal prices being re-established; and
- that the overlay promotions were extended (and in some instances improved) beyond the original closing dates, which disadvantaged customers who bought during the initial sales periods.
Homebase argued that the previous prices had been in place from November to December 2013 and therefore met the 28 day criteria required under the Pricing Practices Guidelines issued by BIS. However, following the ASA adjudication on a Tesco Hobgoblin promotion in September 2014, the fact that the promotion ran for a longer period (83 days) than the normal reference point prices (28 days) meant that the promotion was not compliant with the CAP Code.
Although the ASA acknowledged that a prolonged sales promotion for expensive items such as kitchens could be beneficial for consumers as it allowed them longer to make a decision, in this instance the period of the sales promotion was too long. The ASA further stated that this non-compliance meant that Homebase had exaggerated the possible savings available to consumers.
In relation to the claim that the overlay promotions potentially disadvantaged consumers, Homebase argued that different overlays allowed consumers to have more choice about when to purchase and were therefore not encouraged to make a decision too quickly. However, the ASA held that consumers would not have been aware of any future promotional plans and would have rushed to make a purchase before the end of the original promotion. In this way, the promotion was misleading as it influenced the speed over which consumers responded to the particular ad.
Why this matters:
This decision underlines the point emphasised in the ASA/Tesco Hobgoblin case that availability of products at higher prices for 28 days cannot necessarily be relied on to support use of this as a reference price in later discount promotions. This applies particularly where the promotion runs for a materially longer period. In its recently published a guide called “The “Promotional” Price is Right” CAP said it was aware that the relevant BIS guidance is currently under review but that “the need to ensure clarity of pricing for consumers is highly likely to remain a prominent feature.”
