Who: Which?, the Competition and Markets Authority (the “CMA”) and the UK supermarket industry
Where: UK
When: 27 April 2016
Law stated as at: 19 May 2016
What happened:
CMA follow up report on grocery ad super-complaint from Which?
Last May we reported on a ‘super-complaint’ lodged by Which? with the CMA concerning certain opaque and thereby potentially misleading pricing and promotional practices in the groceries market. In particular, Which? highlighted ‘was/now’ offers (reference price promotions) and multi-buy deals (volume promotions).
In its response of 16 July 2015 the CMA found that supermarkets (in general) “have a good awareness of the key consumer protection legislation and guidance” and most had also “put systems in place designed to prevent the potential for pricing and promotional practices to mislead“. Nonetheless, the CMA indicated a commitment to work with supermarkets in order to make sure that their infamous ‘was/now’ and multi-buy offers were genuine. The CMA’s concern was that consumers may not understand whether they were being offered a good bargain, or may believe the offer was a bargain when this was not in fact the case.
On 27 April 2016, the CMA published an update on its work following last year’s response. The update explains that the CMA has had positive engagement from a number of supermarkets, who have been asked to work with their relevant Trading Standards partners in order to review their rules and practices around promotional pricing.
Commitments from Asda
During this process Asda has come under particular scrutiny, with the CMA calling out the close engagement it has had with the retailer “in order to address specific areas of concern“.
As a result, Asda has now published a formal commitment to implement business changes in order to address its promotional pricing rules. In summary, Asda’s commitments will ensure that:
- ‘now’ prices will not be advertised for longer than the ‘was’ price applied, so that such promotions actually provide a meaningful comparison for consumers;
- multi-buy offers will represent better value than a single product made available 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.
The changes Asda has committed to make are to be fully implemented by August 2016 and the CMA will check on how they are working 6 months after that.
Why this matters:
This report from the CMA signifies another potential nail in the coffin for ‘was/now’ and multi-buy promotions run by large supermarkets. There is a wider move away from such offers in the supermarket industry along with an increasingly prevalent rhetoric around the adoption of more ‘straight-forward’ and ‘transparent’ pricing practices. Back in February 2016, possibly in anticipation of this CMA report, Sainsbury’s announced that it would become the first supermarket to completely phase out multi-buy deals in its stores by the end of August 2016. Other supermarkets, including Morrison’s and Tesco, have also announced efforts to start phasing them out.
The CMA has, however, confirmed that it has not made a finding on whether any retailer has breached the Consumer Protection from Unfair Trading Regulations 2008. Also, the CMA re-confirms (following its announcement in February) that it is not empowered (and has no intention) to impose a ban on certain special offers, such as BOGOF or other multi-buy deals.
CMA executive Alex Chisolm notes that the 27 April 2016 report “draws the CMA’s follow-up work to the super-complaint to an end“.
