The Office of Fair Trading has announced that it has reached agreement with eight of the major retail multiples on a series of “principles” to be applied by them, in relation to pricing display and promotional policies applied in the UK food and drink sector.
The principles do not as such have legal effect, but indicate the OFT’s view on how promotional claims should be used so that consumers can place reliance on them without being misled. Failure to comply with the principles may well be taken into account in the assessment of “fairness” under consumer protection legislation, and may also be relevant in determining whether an offence has occurred under that legislation and whether any “fair dealing” or similar defence is available. Whether that will be the case will, however, be a matter for the courts in each individual case.
Key points to note are:
- That the principles apply only to food and drink and not to other grocery products.
- The principles are primarily aimed at promotional materials which imply particular value by reference to comparison with past selling prices, for example, “was £4 now £2.00” or “30 per cent off” or other terminology implying a discount or price reduction.
- The principles require that prices should not be artificially manipulated to make future planned discounts more attractive, for example by increasing prices so a future discount appears more substantial.
- Where a product has been marketed at a discounted price for longer than the period of time at which the higher original selling price was charged then, at that point, retailers should consider that the value of the product is now established at the lower price and accordingly it is no longer appropriate to continue to describe that price as a discounted price.
- References to previous selling prices should only be used where they give a relevant and meaningful comparison, for example, where the previous selling price with which comparison is made was charged within the relatively recent past and not many months or even years ago.
- Where there are pre-printed value claims on product packs those claims need to be objectively accurate. For example there should be no cheaper way of buying the same volume of the identical product in the same store.
- Although the new “principles” are not of legislative effect, it seems highly likely that in considering enforcement activity under the Consumer Protection from Unfair Trading Regulations 2008, the OFT will place weight on the extent to which the new principles have been adhered to by the trader concerned.