Price transparency: The CMA’s final guidance and why it matters even more now

In parallel with announcing its investigation into misleading and unlawful pricing, the Competition and Markets Authority (CMA) has now published its final guidance on price transparency.

This follows the draft issued earlier this year. Back in July, we explored the draft guidance and what it meant for businesses. While the CMA’s guidance remains largely the same, it helpfully provides more practical examples and a more comprehensive guide to help businesses tackle what is a complex landscape. Particular points to note in the new guidance include:

• Clarification that it is the advertiser that is primarily liable but that if the brand owner or another third party also has a role they can be jointly liable.
• Confirmation that limitations in space are unlikely to amount to a lawful excuse for providing insufficient information.
• Further guidance on how to display prices in ecommerce.

This comes against the backdrop of increased regulatory scrutiny of online pricing. As mentioned above, the CMA has also launched a major consumer protection drive targeting online pricing practices. As part of this, the CMA has opened investigations into eight businesses suspected of infringing the law in relation to their use of fees, misleading time-limited offers, and/or automatically opting consumers into optional charges. The businesses under investigation span a range of sectors.

This represents a new enforcement mechanism for the CMA, given its new powers to decide consumer law issues without having to go to court. As a reminder of the stark reality for businesses, the CMA can levy fines of up to 10% of a company’s global turnover for infringements. In tandem with these investigations, the CMA has also issued advisory letters to 100 firms where it has concerns about the use of additional fees and online sales tactics. These businesses must review their practices or risk further action from the CMA. This makes it clear that the CMA is focusing on a wide range of practices, and if businesses haven’t already reviewed their ecommerce platforms, now is certainly the time.

It's also not the only area of focus on consumer protection law, given the CMA’s announcement in July that it had written to 54 firms that it suspected could be failing to comply with its consumer reviews guidance. For more on the new obligations into relation to reviews, read our article.

Of the tactics investigated, the CMA is particularly alert to the issue of drip pricing – the practice of showing consumers an initial price for a good or service and then “dripping” additional fees later in the purchasing process. The CMA notes that these practices are a particular issue with event tickets, cinema tickets, and gym memberships.

The CMA is not alone in its enforcement drive. The day after the CMA investigation was announced, the Advertising Standards Authority (ASA) also upheld complaints against several large hotel groups due to misleading pricing practices. These rulings were linked as part of the ASA’s proactive work in the hotel sector and based on research gathered by its AI monitoring system. The investigations focused on the issues with “from” pricing. The ASA reiterated its previous position that a significant proportion should be available at the from price, which in hotels meant that where only very limited dates were available to book a stay at the advertised prices or there was insufficient spread across the dates advertised this was problematic. It was therefore held that the pricing claims were misleading and could not be substantiated. Although the ASA did not define what constitutes a “significant proportion”, the rulings indicate that if an ad omits a specific date or range, making the advertised prices available on only one date, even in abundance, will not qualify.

In light of these developments, businesses must be cautious when advertising prices for their goods and services, and how these prices are structured and presented on their websites. Now is the time for companies to review their pricing practices and advertising to avoid being caught out in what is developing into a high-risk enforcement environment.

For more information on the price transparency provisions of the Digital Markets, Competition and Consumers Act 2024 in the draft guidance, read our article.