Supermarket promotions face overhaul after CMA competition probe

16th Jul 2015 08:47

(ShareCast News) - UK supermarkets are to be hit by a range of new rules to try and end "confusing and misleading promotions", after an investigation found some deals had even broken the law. The Competition and Markets Authority (CMA), in response to a 'super-complaint' by Which?, the UK consumer association, found examples of pricing and promotional practices that "have the potential to confuse or mislead consumers and which could be in breach of consumer law"."Where there is evidence of breaches of consumer law this could lead to enforcement action," it added.Analysts had criticised the probe as coming after the "horse had not only bolted, it couldn't be seen", arguing that market forces having impelled major supermarket groups Tesco, Sainsbury, Morrison and Asda to simplify prices in reaction towards the rise of discounters like Aldi and Lidl.While the CMA said these breaches were "not occurring in large numbers" across the industry, it still recommended that more could be done to reduce the complexity in the price of products to make it a more useful comparison tool for consumers.Shore Capital retail analyst Clive Black, originally scathing about the late timing of the super-complaint, hailed the CMA's "common sense" approach in just firing a warning shot that it will "continue to monitor developments and wield its regulatory stick as necessary, [but] not proposing extensive and arduous new regulatory measures upon the industry". As such, he felt it was a "neutral industry outcome".Nevertheless, the CMA has recommended several actions to improve compliance among companies and ensure shoppers are given only clear and accurate information.The competition regulator recommended a clarification on legislation, new government best-practice guideline and said it will work with businesses to cut out promotional practices which could mislead consumers, including the practice of running 'was/now' promotions where the discount price is advertised as a promotion for longer than the higher price applied.Nisha Arora, CMA senior director, said: "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."So we are recommending further action to improve compliance and ensure that shoppers have clear, accurate information."Food pricing issues have dogged UK grocers for some time, with a probe by the Office of Fair Trading (OFT) two years ago cited problems with food pricing display and promotional practices by major supermarkets. The OFT investigation found that some prices were artificially inflated in an effort to make subsequent discounts look like a better deal.Bryan Roberts, director of retail insights at grocery research specialist Kantar Retail, said the CMA's findings confirmed there was "no systematic brinkmanship by supermarkets" and that compliance by the major players is generally pretty good."There is clearly work to do in terms of unit pricing - something that several of the retailers have realised and are already improving - and supermarkets need to raise their game with regards to the smoke and mirrors around price establishment. We maintain our view that the best deterrent against these smoke and mirrors will be the ongoing success of the German discounters rather than regulatory meddling."