Retailers are training buyers to ensure promotions comply with pricing regulations when they are set up but more checks should be carried out while they are in place, according to an investigation by the Competition and Markets Authority (CMA).
In a report the CMA said “most retailers’ compliance mechanisms appear to focus on ensuring ex ante compliance, through training buyers and operational controls” but it found that “once promotions are set up in stores limited further ex post checks appeared to be carried out”.
The CMA said this produced a risk of breaching the Consumer Protection from Unfair Trading Regulations 2008 because of how a “normal” price was defined in a promotion. The CMA’s “primary area of concern” was around the length of promotional periods compared to the time the product was on sale at the "reference price".
“Retailers should consider whether the balance of ex ante and ex post controls is optimal to identify all potential problems and further improve their approaches to compliance,” said the report.
The report said retailers make the final decision about prices and promotions following negotiations between buyers and suppliers but added: “Some retailers informed the CMA that promotions on branded products are driven to a great extent by manufacturers due to the funding support that they provide and the bargaining power held by the manufacturers of the top brands.”
The CMA investigated following a super-complaint lodged by Which? that raised concerns around unit pricing, price matching, pack sizes and misleading special offers.
The regulator concluded retailers had “good awareness of key consumer protection legislation” and most had systems in place to “prevent the potential for pricing and promotional practices to mislead”. But it added: “We have nevertheless encountered examples of particular pricing and promotional practices which, in our view, have the potential to mislead or confuse consumers and could lead to a breach of consumer law.”