CMA steps up enforcement relating to online pricing practices

This week, following the publication of its final price transparency guidance, the Competition and Markets Authority (CMA) announced a “major consumer protection drive” focused on online pricing practices, as foreshadowed in our recent blog. In parallel, the Advertising Standards Authority (ASA) released a series of rulings on misleading pricing claims. 

Taken together, these developments emphasise the importance for businesses of reviewing their consumer-facing marketing activities to ensure that they comply with the updated price transparency rules under the DMCCA.

What's New?

1. Final price transparency guidance published: On 18 November, the CMA published its final guidance on the price transparency provisions of the DMCCA, following consultation over the summer. The guidance has been expanded and now includes additional worked examples of the CMA interprets the price transparency requirements of the DMCCA.
2. CMA opens first price transparency enforcement actions: On the same day, the CMA announced that it has launched formal investigations into eight businesses relating to their online pricing practices, including drip pricing, the use of time-limited offers, and automatic opt-ins for additional services.  The investigations are the first that have been publicly launched by the CMA using its new consumer protection powers under the DMCCA.  The CMA also says that it has sent “advisory letters” to 100 businesses across 14 sectors, outlining concerns about their online pricing practices. It has said that these focus on drip pricing and the use of misleading countdown timers, which are banned under the new consumer regime.
3. ASA rulings on price transparency: On 19 November, the ASA published four rulings on the issue of products priced “from £…”, without (in the ASA’s view) the relevant price having been adequately established. The ASA has been vocal about its use of AI tools to sweep for potentially non-compliant ads, and we expect to see this trend of sector and issue-specific ad compliance sweeps continue. 

Are you prepared?

The CMA has been clear that it will act to protect consumers and that early enforcement action will focus on the most egregious and harmful practices. The recent developments underscore the CMA’s focus on online pricing practices, including drip pricing. Now is a good time to consider:  

• Comprehension. Check that you have a clear understanding of the CMA’s expectations for businesses by getting up to speed on the finalised guidance on price transparency.
• Compliance. Make sure that your business is set up to comply with the new provisions and that you hold adequate substantiation for pricing claims (such as discount/price reductions).
• Capabilities. Make sure sales and marketing teams are aware of the new rules, including those relating to drip pricing, and have considered how to operationalise the principles set out in the CMA’s finalised guidance. Consider whether further staff training is required. 

For more information and regular updates about the DMCCA, please check our DMCCA Client Toolkit. If you are not a subscriber and do not have access, you can subscribe by clicking on this link.