CMA takes action on online pricing

The Competition and Markets Authority (CMA) has unveiled a significant initiative targeting online pricing practices, to ensure a fair marketplace under the recently enacted Digital Markets, Competition and Consumers Act 2024 (DMCCA). This legislation is designed to protect consumers from unfair pricing tactics such as drip pricing and pressure selling, facilitating a more transparent shopping experience. The CMA hopes these efforts will empower consumers to make informed decisions while allowing honest businesses to thrive in a competitive landscape.

Iona Silverman, an Intellectual Property & Media Partner at Freeths, expressed her views on the CMA's announcement. She stated, “The CMA has announced that it will investigate the way in which eight businesses communicate their pricing to consumers." This action follows the introduction of new rules on drip pricing and hidden charges. The CMA now possesses the authority to enforce these regulations and issue penalties of up to 10% of global turnover for violations.

Despite Silverman's acknowledgment of the CMA's proactive approach, concerns linger regarding the scope of the investigation. She noted, “While it is encouraging to see enforcement action from the CMA, critics will say that investigating eight companies for price transparency doesn’t go far enough." Companies being scrutinised include the AA Driving School and BSM Driving School for allegedly obscuring mandatory fees in the total price presented to consumers. Such practices are not limited to driving schools, as airlines are frequently cited for adding hidden costs like seat selection, luggage fees, and expedited boarding, complicating price comparisons for families.

Furthermore, homeware retailers such as Wayfair, Appliances Direct, and Marks Electrical are under investigation for failing to honour time-limited sales. While these retailers are facing examination, Silverman indicated that many others who engage in similar cyclical pricing tactics seem to evade scrutiny. She remarked, “Many of my clients ask me why they aren’t allowed to present prices or discounts in a certain way when they can see that their competitors are."

The CMA's recent actions serve as a reminder for businesses to maintain compliance with consumer protection laws. Retailers abiding by these regulations can rest a bit easier, knowing they are not under investigation and are likely to avoid potential fines. As developments unfold, the CMA's enforcement of the DMCCA will play a crucial role in shaping the future of online retail practices in the UK.