Price transparency: CMA’s draft guidance and key takeaways

Following the main consumer elements of the Digital Markets, Competition and Consumers Act 2024 (DMCCA) coming into force on 6 April 2025, the Competition and Markets Authority (CMA) has recently published draft guidance on price transparency and launched a consultation to hear the views of stakeholders. The consultation will run over the summer until 13 September 2025, after which the CMA has said it will publish its final guidance later in the autumn.

The draft guidance has been produced after concerns were raised that the CMA’s original draft guidance on “unfair commercial practices”, published on 11 December 2024 (and subsequently finalised on 4 April 2025), created more uncertainty around its interpretation of the price transparency provisions in the DMCCA, including so-called “drip pricing”. The CMA subsequently stated they would produce separate draft guidance in this particular area to try and provide more clarity. In its current form, this guidance reinforces the key principles that prices must not be misleading, and consumers must be given the information they need to enable them to make an informed decision about their purchase.

Key takeaways:

What is an invitation to purchase (ITP)?

• Any commercial practice where information is given to consumers about a product and its price, eg adverts, posters, product listings or a price tag on the product. This does not include general “brand” advertising where no reference is made to any particular product, or the advert does not reference price at all.
• It does not need to include an opportunity for the consumer to purchase the product or tell them how to do this, so all adverts with prices are considered ITPs. A consumer may be given an ITP at many different stages of the purchase process so an e-commerce journey typically includes multiple ITPs. The relevant information set out below must be included in each ITP.  

What information must be included in an ITP?

• Prices of products in an ITP must not be misleading and should be “realistic, meaningful and attainable for the product being advertised”. Particular care must be taken with, for example, “from” prices and prices that apply only in limited circumstances, eg due to limited stock.
• An ITP must state the total price, inclusive of all mandatory fees, taxes, and charges. If this cannot reasonably be calculated, then the ITP should include information on how the price will be calculated (eg, the price per kg/hour/person).Where the price is made up of both calculable and non-calculable elements, information relating to the latter must be displayed as prominently as for the former, typically underneath or next to the headline price. The CMA acknowledges that in exceptional cases this may not always be possible due to limitations of space and/or time based on the medium used, but is likely to construe such exceptions narrowly. In any event the trader is still obliged to provide this pricing information by other means.
• Prices should be presented clearly, prominently and in a timely manner.

Mandatory vs optional charges:

• If a product cannot be purchased without the payment of the charge, then it is mandatory and should be included in the price. For example, administration fees, delivery charges, purchase and local taxes, pick-up fees, and joining fees. Traders are welcome to set out a breakdown of how the total price is made up.
• Per-transaction charges are also mandatory charges and should always be included in an ITP and the total price.
• Delivery charges are mandatory charges if the consumer cannot purchase the product without paying the charge for delivery. Delivery charges are not optional even if several paid options are made available, as the consumer still has to pay the charge, although the trader is permitted to include only the cheapest option in the headline price unless/until the consumer selects a more expensive option.
• Local taxes, if unavoidable, must be included in the total price even if payable locally or in a foreign currency. These are normally reasonably calculable and should be included in the total price. Where payable in a foreign currency the approximate charges must still be calculated and included in the total price with an explanation of the currency exchange rate used.
• In some circumstances, even optional charges should be included in the headline price, if it is reasonably foreseeable that most consumers will need or want to pay them.

Generally prohibited practices:

• Drip pricing – where an initial price is shown but additional mandatory charges are added later in the purchase process, as this does not provide the requisite “accurate and timely pricing information” consumers require to make an informed choice.
• Partitioned pricing – where separate component prices are listed rather than showing the total. This is generally only permitted where the total price cannot reasonably be calculated in advance as it makes it more difficult for consumers to compare prices on a like-for-like basis; where at least some of the price is calculable in advance this should be set out in the headline price.

Summary

While the price transparency provisions of the DMCCA are not significantly different from that of the Consumer Protection from Unfair Trading Regulations 2008 which they have replaced, the new scope of the CMA under the DMCCA calls for a review of many businesses’ pricing practices to ensure compliance with the legislation. This is especially important given the CMA’s new powers to directly fine traders up to 10% of their annual global turnover for breaches of this legislation, without the need for court proceedings.