In the latest stage of its epic market study on the advertising of prices, the Office of Fair Trading has published, in slightly weird slide format, its thoughts on new “principles” aimed at giving guidance on when a price claim breaches Consumer Protection from Unfair Trading Regulations. Simon Fisher asks if the price is right.
Who: Office of Fair Trading
When: 31 August 2010
Law stated as at: 6 October 2010
As part of its review of price advertising practices, the Office of Fair Trading ("the OFT") has published its draft proposals for principles to be used in assessing whether price claims breach the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs").
Currently the principal source of guidance in this area is the BIS "Guidance for traders on good practice in giving information about prices" first published in May 2008.
The new proposed principles do not represent new rules, says the OFT, but rather a "suggested starting point" for determining whether the CPRs might have been breached.
The suggestions follow a legal discussion paper and two research papers published earlier in 2010, are available at http://www.oft.gov.uk/OFTwork/markets-work/current/advertising-prices/ and look to impose greater transparency in respect of price claim practices such as:
- for "drip" pricing, where price increments such as delivery charges and taxes "drip" through the buying process, the headline price should include these additional charges and, where appropriate, state the cheapest option;
- for "baiting sales": where only a limited volume of products is available at the reduced price, if traders are not able to meet at least half of the anticipated demand at the offer price, this should be clearly stated in advertisements;
- also on baiting sales, if availability at the lower price is very restricted, it may not be sufficient to simply state "hurry while stocks last". An indication of availability in units at the start of the offer may be required;
- for "reference prices" where there is a relatively reference price such as "was £50, now £20" : or "50% off,",the previous price must have been available in the majority of outlets and be a relatively current comparison;
- also on reference prices, traders must state if they have sold the product at a lower price in the three months prior to the offer starting; and
- for "time-limited offers": such as sales which finish at the end of the month or special prices which are available for one day only, the start and end date dates should be clearly stated and only extended for reasons outside the trader's control.
Why this matters:
A number of these suggestions are highly restrictive and would represent a significant tightening of the UK's price claim regime.
Retailers may well wish to express their views on these and there will be opportunities. For example there will be roundtable discussions with industry stakeholders, consumer groups and other interested parties over coming weeks. Any stakeholders not included in these discussions have also been invited to submit their written comments to the OFT.
The OFT anticipates publishing its final report by the end of 2010 and may include recommendations for greater regulation or self-regulation via an industry code of practice, the use of consumer enforcement powers or a market investigation reference to the Competition Commission.
Finally a word on presentation methods.
The OFT proposals take the form of 12 slides with bullets. This is an interesting presentational departure, which gets marketinglaw's vote for brevity and accessibility. It is also a refreshing contrast to the consultation practices of some regulators we could mention such as Ofcom and the Financial Services Authority, who appear to regard any consultation paper running to less than 150 pages as not worth taking seriously. The tactic does not seem to have worked well for either body in light of the view of them currently taken by HM Government. Let us hope more regulators take a leaf out of the OFT's book.