CMA forces supermarkets to change price promotion tactics

The UK competition regulator has demanded several large supermarket groups to review their promotions and has been forced to arrange specific changes with US-owned Asda, with a government consultation set to begin into legislation and guidance on unit pricing.

The Competition and Markets Authority (CMA) found some supermarket promotional practices could mislead shoppers and so has begun working with companies and Trading Standards Services to "ensure that shoppers can have more confidence they are getting a good deal".

This followed an investigation after consumer body Which? raised concerns about supermarket pricing and promotional practices in a 'super-complaint' in 2015 that criticised promotions as "confusing and misleading" and said some deals had even broken the law.

The CMA said on Wednesday that its main issue was with grocers' use of ‘was/now’ offers and multi-buy deals, where it questioned whether these were being applied appropriately and said the companies would have to work with Trading Standards "so shoppers can see when they are getting a real discount and make informed shopping decisions".

CMA executive director for enforcement, Michael Grenfell, said his examination of the market had found that while supermarkets generally take compliance seriously, "there were some promotional practices that could mislead shoppers".

While the CMA has not penalised Asda, the Walmart company has pledged to change the way it operates ‘was/now’ and multi-buy deals to ensure that ‘now’ prices will not be advertised for longer than the ‘was’ price applied, ensuring they are a meaningful comparison.

Asda has also agreed to ensure multi-buy offers represent better value than a single product before the offer, and that they will not be immediately followed by ‘was/now’ promotions, so it will be easier for shoppers to tell what is a good offer.

The CMA said its follow-up work to the super-complaint had now drawn to an end, while the Chartered Institute of Trading Standards was working on a revision to the Pricing Practices Guide and the Department for Business, Innovation and Skills (BIS) has indicated to the regulator that it intends to begin a consultation, following the CMA's recommendation that it review the legislation and guidance on unit pricing.

Shares in Tesco, Sainsbury and Morrison were all lower on Wednesday morning.