The Price is Right Jonathan Kirk QC Jonathan Goulding Anna - PowerPoint PPT Presentation

‘The Price is Right’ Jonathan Kirk QC Jonathan Goulding Anna Medvinskaia Daniel Brayley GOUGH SQUARE CHAMBERS

2 2. What is the Pricing Practices Guide? • Guidance to traders by the CTSI on behalf of BEIS • Principles - Factors – Examples • A living document

3 3. Is the new PPG a code of practice? • Best practice or minimum standard? • Confusion with the code of practice under the CPA 1987 • Maximum harmonisation under EU law • Banned practices • Assessment by main unfair practices

4 4. What is its legal status? • “Designed to provide helpful common sense advice to traders” • “This guidance is not statutory guidance and a court is not bound to accept it . The decision whether any particular pricing practice is unlawful remains to be judged by all of the relevant circumstances.” • Evidential admissibility

5 5. Focus on the average consumer • Average consumer is reasonably well informed, observant and circumspect • Materially misleading • Overall impression • Consumer vulnerability

6 6. Abolition of 28-day rule 28-day rule for price establishment • PPG 2010 ‘A price used as a basis for comparison should have been your most recent price available for 28 consecutive days or more’ [1.2.3(a)] • Replaced by non exhaustive list of factors

7 7. Abolition of the ten percent rule The ten percent rule • 2010 PPG “General notices saying, for example “half price sale” or "up to 50% off" should not be used unless the maximum reduction quoted applies to at least 10% of the range of products on offer at the commencement of the sale.” [1.9.3] • Replaced by “You should only make such a claim if the maximum reduction quoted applies to a significant proportion of the range of products that are included in the promotion.” •‘Significant’ comes from OFT v Officer’s Club [2005] EWHC

8 8. Other significant matters • Comparison to a competitor’s price • Encouraged for products with same intended purpose • Volume offers – BOGOF, meal deals, free offers • Guiding principle- does it genuinely offer better value? • Additional fees • Distinguishes between truly optional and compulsory charges (whether fixed or variable).

9 9. Will there be more enforcement action? • Enforcers have been waiting for the new PPG • Due diligence guidance in the PPG focused on record keeping • Review your pricing policies in accordance with the PPG 2016 • Be aware of Citroẻ n Commerce , Case C-476/14

10 10. Price establishment • The 28-day rule replaced with a non-exhaustive list of factors. • Most important: – Duration – Outlets – Volume of sales

11 11. Duration More likely to comply if promotion period is same or shorter than the price establishment period; less likely if promotion period is materially longer

12 12. Outlets More likely to comply if price established in same store that goes on to use promotion price; less likely if different store

13 13. Insignificant sales More likely to comply if able to evidence significant sales at higher price or that realistic selling price; less likely to comply if repeatedly use reference price in knowledge that had not sold significant number of units at that price.

14 14. Other factors • Time between price establishment and promotion • Out-of-season reference pricing • Promotions during the price establishment • Intervening prices • Series of price claims

15 15. Practical advice • Try to set prices where reasonable expectation that consumers would purchase • Care in choice and number of outlets • Keep records to show volume of sales at higher price and the higher price was realistic

16 16. Recommended retail prices • Be clear higher selling price is RRP • Genuine selling price • Should not recommend own RRP/ influence how price set • Substantiation

17 17. Different circumstances • Pricing models that are not like for like • Basis of saving must be explained clearly etc • Comparing products in different conditions • Available Car Limited ASA A15 310623

18 18. Small Print • Small print should not contradict the main claim • Material information must be clear and prominent • Using technology fairly

19 19. Comparison to a competitor’s price

20 20. Fair comparisons • General price savings claims / basket of goods • Intended for the same purpose • Objectivity of comparisons • Local price variations

21 21. Evidencing the comparison • Verifying the comparison • Monitoring change • Evidencing the comparison

22 22. Compulsory charges • Fixed – include in upfront price • Variable – method of calculation clearly set out

23 23. Optional charges • Charges should be genuinely optional • They must be clearly stated

24 24. Subscriptions • Extent of customer’s commitment clearly and prominently set out at the outset • Express consent to additional payments before being charged

25 25. Volume offers

26 26. The Which? Super-complaint • Focus on volume offers came about because of Which? super-complaint to the CMA on misleading and opaque supermarket pricing. • Shrinking products, same price for less • Unit pricing inconsistent (100g or 0.1 kg) • Unit pricing is often missing from special offers • CMA response in July 2015, breaches not incurring in large numbers, supermarkets generally taking compliance seriously.

27 27. Types of volume offers • Multi-buy: e.g. buy one get one free, three for the price of two • Combination offers: the meal deal • Linked offers: free/discounted product for purchasing another product • Extra for the same price, e.g. 50% extra free.

28 28. Principles for volume offers Principles derived from PPG 2016: • Consumers must genuinely be getting better value because of the offer. • Don ’ t take advantage of how bad we all are at arithmetic “You should not take advantage of the fact that many consumers will not calculate for themselves whether the price promotion actually offers better value’ • Pre-printed value claims, such as ‘Bigger Pack – Better value must be objectively justifiable.

29 29. General reductions • "Up to 50% off " • Must reflect reality of the offer • Should apply to significant proportion of products in the promotion

30 30. “Free” • Only where nothing paid other than unavoidable costs of responding or delivery payment • Item genuinely free • Free item must be genuinely additional/ separate

31 31. Questions