Asda be different: but all the other major supermarkets sign up to new OFT pricing principles

Following investigations into supermarket pricing, the OFT has announced (click here) that eight supermarkets – Sainsbury’s, Tesco, Waitrose, Aldi, Co-op, Lidl, Marks and Spencer and Morrisons – have agreed to a new set of principles (click here) to govern special offers and promotions for food and drink. The principles are designed to promote transparent pricing and ensure that consumers can rely on product offers being fair and meaningful.

While the OFT considered a range of issues during its analysis of more than 700,000 prices, two specific forms of promotional activity emerged as priorities:

  • internal reference pricing; and
  • pre-printed value claims.

Internal reference pricing applies to offers which use a past selling price to indicate a current offer, such as “Half Price” or “Was £3, Now £2” discounts. Consumers have expressed concerns that prices may be artificially inflated for short periods to make later discounts look more attractive, or that prices may be marketed as discounts for longer periods than those for which higher prices were initially charged. Where the discount period exceeds the period for which the “normal” price applied, the principles now confirm that supermarkets should be prepared to justify why the extended discount price is not in fact a normal selling price.

In respect of pre-printed value claims, such as “Bigger Pack, Better Value” or “Buy One, Get One Free”, the new principles state that such claims should be objectively accurate, and there should not be any cheaper way of buying the same volume of an identical product in store.

The OFT’s investigation, which included mystery shopping exercises, a consumer survey, bilateral meetings with supermarkets and round-table discussions with consumer groups,  did not reveal any evidence of illegality under the Consumer Protection from Unfair Trading Regulations 2008 (click here). The OFT found that there were inconsistencies in the way the law was interpreted and applied across the sector, but it has not recommended any changes to the law.

In apparent acknowledgement that the new principles do not oblige retailers who were already following the relevant law and guidance to do anything differently, the OFT says that the new principles are designed to clarify the law and minimise the risk of consumers being misled by retailers. The OFT has also confirmed that it is unlikely to commence enforcement action against traders where the new principles have been followed, but that traders are encouraged to work to a higher standard that benefits consumers beyond the minimum protection required by the law.