Are your grocery prices fair?
30th April, 2015
Competition and consumer regulator, the Competition and Markets Authority (CMA) is considering whether to open an investigation into grocery pricing practices following a "super-complaint" from consumer organisation Which?
Retailers of groceries (which include food, alcoholic and non-alcoholic drinks, cleaning products and household goods) and their suppliers are advised to take action in preparation for the CMA’s response, which will be published within 90 days.
What has happened?
Which? has exercised its power as a “designated consumer body” under the Enterprise Act 2002 to submit a super-complaint to the CMA.
As required by the Act, the super-complaint gives details of features of the groceries market that Which? consider are significantly harming the interests of consumers.
In this case, the practices in question relate to the way in which groceries are priced.
What are the pricing practices in question?
The super-complaint refers to prices that Which? describes as “misleading and opaque”. These include:
- Certain types of special offer, including reference pricing (or “was/ now” pricing);
- Problems with displaying prices per unit;
- Pack sizes shrinking while the price remains the same; and
- Price matching, i.e. offering to reimburse customers if they could have found a lower price elsewhere.
Examples cited by Which? include products that are advertised as “better value” in a multi-pack when in fact the price of an individual unit is cheaper, and seasonal offers where the higher price has only been applied out of season.
Which? considers that these practices lead to consumer detriment where the savings represented are not genuine, or where they mislead or confuse customers.
What might happen next?
The CMA has 90 days from receiving the complaint to publish its response. At that point it has a number of possible options, including opening an in-depth market study, recommending changes in law or regulation or determining that the complaint is unfounded.
The CMA also has powers to investigate individual companies that it suspects of breaking competition or consumer law rules through their pricing practices, and to impose fines and criminal penalties.
To help it reach its decision, the CMA intends shortly to invite comments from interested parties.
What does this mean for me?
Retailers of groceries are advised to familiarise themselves with the contents of the super-complaint and to consider whether their own pricing practices fall within its scope.
Retailers and their suppliers may wish to submit comments to the CMA during its initial review of Which?‘s super-complaint, either about their own practices or those of their competitors or retail partners.
How can Ward Hadaway help?
Our lawyers have experience in assisting clients in the grocery and wider retail sectors on regulatory investigations, and recently advised on a CMA investigation into pricing practices similar to those raised by the super-complaint.
We regularly work with clients to prepare submissions to the CMA, and to assess the compliance of their pricing practices with competition and consumer laws.
For an informal discussion about how we could help you, please get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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