Daily Management Review

CMA Probe Finds Anomalies in UK Supermarket Promotions, Suggests Stricter Changes


07/16/2015




CMA Probe Finds Anomalies in UK Supermarket Promotions, Suggests Stricter Changes
No more misleading promotional offers by the UK supermarkets - that is the directive by the Competition and Markets Authority (CMA) in response to a 'super-complaint' by Which?, the UK consumer association.

The CMA would also issue a new set of rules and guidelines for the advertisement by supermarkets soon so that the pricing and promotional practices and advertisements do not confuse or mislead consumers, said a Competition and Market Authority communiqué on Thursday.

During the investigation, the CMA had found examples of pricing and promotional practices that could most likely confuse and mislead consumers. The press communiqué issued by the CMA said that the misleading advertisements   “could be in breach of consumer law. Where there is evidence of breaches of consumer law this could lead to enforcement action”.
 
Analysts however claimed that the action is a little too late as the CMA had not looked into the issue when discounters like Aldi and Lidl had began the price war that possibly compelled other supermarkets like Tesco, Sainsbury, Morrison and Asda to follow up the competition and engage in the price war.  
 
The CMA claimed that while this was not an industry wide phenomenon,  it affirmed that “more could be done to reduce the complexity in unit pricing to make it a more useful comparison tool for consumers”.

The CMA would soon work out a strategy, in consultation with business that could lead to new regulations and guidance to trim down on promotional practices that could be potentially misleading for consumers.

One of the particular aspects of promotional war pricing advertisements that the CMA had identified in the probe was the practice of running ‘was/now’ promotions where the discount price is advertised as a promotion for a period that is often longer than the higher price applied.

In a recommendation by the CMA, it has asked the Chartered Trading Standards Institute to clarify how the legislation applies to certain promotional practices and the revision of the ‘Pricing Practices Guide’. The authority also wants the best practice guidelines on the legibility of unit prices be published by the Department for Business, Innovation and Skills (BIS) as well as to simplify and clarify the legislation with respect to the unit pricing of items during a promotional campaign.
 
For the help of the consumers, the CMA had already published a ‘at-a-glance’ guidance so that consumers better understand the aspect of unit pricing.
 
“We have found that, whilst supermarkets want to comply with the law and shoppers enjoy a wide range of choices, with an estimated 40% of grocery spending being on items on promotion, there are still areas of poor practice that could confuse or mislead shoppers,” Nisha Arora, CMA Senior Director, Consumer said. This had prompted the CMA to recommend further action to ensure complete compliance and understanding of the consumers about unit pricing during promotions.

The existence of problems with food pricing display and promotional practices by major supermarkets were revealed two years ago by a probe by the Office of Fair Trading (OFT). In a similar finding as one found by CMA, that probe had found that supermarkets had artificially overpriced certain prices so that the discounts later offered looked more daunting and to a customer the discounted prices looked a better deal than they actually were.
 
(Source: http://www.gov.uk/government/news & http://www.digitallook.com) 






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