PROMOTIONAL PRACTICES
noticeable inconsistency with existing guidance. For example, the most obvious conflict is the often-used exemption that allows the promoter to overlook guidance providing that the basis of price comparison is made explicitly clear, the logic being that the consumer cannot be misled if the retailer has explained its offer properly. While consistent with the criminal law underpinning this area, the OFT does not comment on the acceptability of using explanatory text to make the basis of comparison clear, meaning there is ambiguity on whether that practice is acceptable or not.
GENUINE SELLING PRICE There is also confusion as to when a price becomes a genuine selling price and when it is a price reduction. This is a particularly stark problem for soft fruits and other seasonal items where there are limited sales all year round but the majority of purchases take place during the peak season. The price of such products will step down as supply exceeds demand, but the OFT believes that comparing peak season costs with off season is misleading. Why is this? If the product was for sale and sold at the higher price, surely it is a genuine selling price and the consumer is entitled to be informed that the price is now lower?
only be used as a relevant and meaningful basis for comparison.
ARE THE GUIDELINES REALLY HELPFUL? There has been debate around how useful the new guidelines are, especially as examples that have been given often raise more questions than they answer. To aid interpretation, the OFT has provided good and bad instances of each practice which, superficially, are logical and make sense. However, once one digs a little deeper or thinks about the practical implications, there is a
MEANINGFUL PRICE COMPARISON Providing a meaningful basis for comparison is a similarly unclear area, despite the new guidelines. In the past, the Department for Business, Innovation and Skills’ (BIS) Pricing Practices Guide allowed a comparison against the immediately previous selling price, so long as that price was available less than six months ago. Now however, the OFT appears to be trying to reduce this time period to two months, in order to give a ‘genuine’ indication of the current value of the product. While somewhat logical, this is a significant move for product groups where price remains relatively static. However, the new guidelines on this will be of less concern where there is continual price movement.
BIGGER PACK, BETTER VALUE?
Whether bigger packs are in fact better value has been the subject of much media coverage. Offers on bigger packs declaring that
FMCGNews.co.uk | FMCG News | 37
they are the best value can often turn out to be false, due to the price changes of smaller packs. The OFT has stated that ‘bigger pack, better value’ claims must be objectively accurate, which no one would disagree with, but goes on to say that: “There should exist no cheaper way of buying the same volume of the identical good in the same store”. This means that the bigger pack must offer the best effective unit price.
ARE THESE GUIDELINES REALLY NECESSARY? When the UK adopted the Unfair Commercial Practices Directive in 2008 to increase consumer protection in relation to pricing, we also adopted a new definition of ‘consumer’: the ‘average consumer’. That consumer is ‘reasonably well informed’, ‘reasonably observant’ and ‘circumspect’. It may be a simplistic way of looking at the seller-consumer dynamic, but a consumer with those attributes is able to look at the price in front of them and make an assessment of whether it is a good deal or not. If they are happy to pay that price, then it cannot be claimed that they have been misled. With the basic question, ‘am I happy to pay that price?’ underpinning all sales, it is questionable whether the OFT’s new guidelines will make any real difference. Asda is currently the only ‘big four’ supermarket that has not signed up to the principles, so it will be interesting to see how things differ between the retailer and its competitors. A final point: no national retailer has ever been convicted for pricing offences under the Consumer Protection from Unfair Trading Regulations, which would suggest to me that the issue is not as significant as the media may make out.
“With the basic question, ‘am I happy to pay that price?’
underpinning all sales, it is questionable whether the OFT’s new guidelines will make any real difference.”
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