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Make prices clearer for consumers, UK competition watchdog tells supermarkets

The UK’s Competition and Markets Authority (CMA) has told UK supermarkets to make their prices more transparent to aid shoppers during the cost-of-living crisis.

In a newly published preliminary report, the UK’s competition watchdog concluded that food prices are not being clearly and fairly displayed in supermarkets leading to shoppers losing out on deals.

According to the CMA, parts of the issue stem from the unit pricing rules themselves, which allow unhelpful inconsistencies in retailers’ practices and leave too much scope for interpretation.

“With so many people struggling to feed their families, it’s vital that we do everything we can to make sure people find the best prices easily,” said Sarah Cardell, CEO of the CMA.

“We’re writing to these retailers and warning them to make the necessary changes or risk facing enforcement action. The law itself needs to be tightened here, so we are also calling on the government to bring in reforms.”

Pricing practices of most concern to the CMA

The CMA’s concerns specifically relate to the consistency of supermarkets in the measurements used for similar types of products.

The report said that this made it difficult for consumers to compare deals on a like-for-like basis. For example, tea bags being priced per 100 grams for some products and others being unit priced per each tea bag.

Also under scrutiny was the degree of transparency supermarkets were working to with cases of missing or incorrectly calculated unit pricing information highlighted both in store and online.

The report gave an example of a 250ml handwash costing €1.80 (£1.19) but unit priced at €552.00 (£476.00) per 100ml. Here, unit pricing information was unavailable online until items were selected.

Other points of concern was legibility, where unit pricing information was difficult to read, for example text on labels being too small or shelf edge labels being obscured by promotional information or by shop fittings.

The CMA also highlighted supermarkets’ approach to promotions, where some retailers were not displaying unit prices for any products on promotion.

Varying interpretation of the Price Marking Order 2004 (PMO)

In setting out the issues, the CMA also set out recommendations on the unit pricing rules whilst also calling on the government to reform current legislation. The CMA will publish its findings in Autumn 2023.

One possible explanation for the confusion facing consumers are the stipulations relating to unit prices that are outlined in the Price Marking Order 2004 (PMO).

While this rule requires the unit price must be given to consumers in writing (this includes in catalogues, in shops and via the internet), for goods offered for retail sale, it also allows for “unhelpful inconsistencies in retailers practices and leave too much scope for interpretation,” the CMA said.

UK consumer watchdog Which? agreed with this in a new policy paper describing the PMO as “outdated and in need of reform.”

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“But it is also because different retailers interpret the current law and guidance differently, with some making it easier to compare prices than others,” in an echo to the CMA’s comments.

Which? recommended two immediate improvements

Some of the immediate improvements recommended by Which? include making it easier to assess if promotions offer best value, a particular issue for some supermarket loyalty card pricing.

“We recently highlighted how we thought Tesco could potentially be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) because it does not include unit pricing on Clubcard prices, in contrast to Sainsbury’s who do this for Nectar prices,” they said.

Another short-term improvement was improving legibility of unit pricing, where Which? investigations found large variation in terms of prominence, size relative to the selling price and use of colours or contrast within, as well as across supermarkets.

“Current legislation and guidance is not very clear about what is appropriate,” the watchdog group said. “Clearer guidance should therefore be provided, setting out what is best practice.

“There is an International Standards Organisation (ISO 21041: 2018) standard on unit pricing, which should be used by supermarkets – but greater clarity from government is also needed.”

BRC: ‘Supermarkets working hard to support customers’

Responding to the CMA report, Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said, “Supermarkets have been working hard to support their customers through the cost of living crisis and will be reflecting on the CMA’s recommendations on unit pricing.

The CMA itself notes that “many of these problems stem from the rules themselves,” and retailers stand ready to support proposed changes to the unit pricing rules.

“As noted in the report, supermarket margins have remained extremely tight as they try to support their customers and absorb the worst of the rising costs in the supply chain.

“In the last few months, some of these pressures have begun to ease, such as with global commodity prices and the weakness of the pound."