CMA doubles down on drip pricing, launching three new investigations

Giles Warrington, Paul Williams and Tadeusz Gielas, competition and consumer law experts at Pinsent Masons, were commenting on the investigations concerning the online pricing practices of Trainline, Virgin Atlantic and RED Driving School. They form part of the CMA’s continuing focus on tackling ‘drip pricing’, where consumers are shown an initial headline price for a good, service or digital product and additional mandatory charges are introduced, or ‘dripped’, later in the checkout process.

The CMA has emphasised that the investigations are at an early stage and that it has reached no conclusions about whether any of the businesses have breached consumer law. It will now gather evidence about how relevant charges were presented to customers.

In Trainline’s case, the CMA is examining whether mandatory fees were included in the upfront prices displayed to consumers buying advance train and coach tickets through its app and website. The CMA said it observed train transactions involving fees between £0.59 and £2.79, as well as a £1.50 coach booking fee.

The Virgin Atlantic investigation concerns whether mandatory resort fees and local taxes were included in the upfront prices shown to customers purchasing package holidays. The CMA said these charges vary but may add hundreds of pounds to the price of a holiday.

The RED Driving School investigation focuses on the presentation of a mandatory booking fee and “digital” fee. According to the CMA, the charges amount to more than £7 per booking.

The CMA has stated that all three businesses previously received advisory letters during its first consumer protection drive using its strengthened enforcement powers. Those letters placed the businesses on notice about the CMA’s concerns and reminded them of their consumer law obligations. The regulator said it remained concerned about the relevant pricing practices following ongoing monitoring.

Warrington said: “The investigations highlight that the CMA expects businesses to take CMA advisory and warning letters seriously. These can, in practice, require them to change their business practices promptly to ensure compliance with UK consumer protection laws and CMA guidance or risk facing formal CMA enforcement investigations.”

Under consumer law provisions of the Digital Markets, Competition and Consumers Act 2024 (DMCCA), businesses making an invitation to purchase must generally state the total price of a product, including fees, taxes and other charges that consumers are necessarily required to pay. Where part of the total price cannot reasonably be calculated in advance, consumers must be given information enabling them to readily calculate it.

As the CMA is the UK’s primary enforcer for both competition law and consumer law, the authority’s drip pricing concerns include both consumer protection and competition aspects. If unavoidable fees are omitted from a headline price, an offer may initially appear cheaper than a competing offer that includes all mandatory components, which can also undermine effective price competition.

Williams said: “Clear upfront pricing supports effective comparison between competing offers. Where mandatory charges appear only later in the customer journey, an initially lower price may affect both consumer choice and the way businesses compete.”

The investigations build on earlier CMA direct enforcement consumer law action concerning pricing transparency. In April, the CMA imposed a £4.2 million penalty in its first drip pricing case under the DMCCA. The CMA fined Automobile Association Developments Limited, the owner of AA Driving School and BSM Driving School, after the company admitted breaches relating to a mandatory booking fee that had not been included in upfront prices. The company was also required to provide more than £760,000 in customer refunds.

The CMA subsequently fined ticket resale platform StubHub UK £900,000 and required it to refund affected customers following an investigation into mandatory fees introduced during the purchasing process.

“These outcomes illustrate the potential consequences for businesses where an infringement is established, although each case turns on its own facts. If the CMA concludes that consumer law has been infringed, it may impose financial penalties of up to 10% of a business’s global annual turnover as well as possible consumer redress measures,” said Williams.

Gielas said: “The CMA drip pricing cases underline the importance of examining the complete customer journey and identifying every charge or fee that is unavoidable and ensuring it is included in the headline price. The CMA’s focus on pricing practices is not confined to drip pricing, however. Other pricing practices, such as ‘reference’ pricing, and subscription-based pricing, are also in the CMA’s crosshairs.”

For example, in July the High Court handed down judgment in CMA proceedings against Emma Sleep which illustrated the complex, fact-specific assessment required to determine whether certain reference pricing practices – also known as ‘was/now’ pricing – infringe consumer law. The court declined to impose an enforcement order sought by the CMA and instead invited both parties to agree the terms of a further order.

Also in July, the CMA launched separate consumer law investigations into software subscription pricing and private parking charges, which are ongoing along with several other previously launched investigations under the DMCCA.

Gielas added: “Drip pricing, reference pricing, and subscription pricing entail different legal assessments under the DMCCA, but each practice requires traders to pay close attention to what information consumers are given, when that information is provided, and whether the information gives a clear picture of the consumer’s financial commitment. All such pricing practices are subject to direct enforcement by the CMA under the DMCCA, meaning that the CMA can establish infringement and impose fines and redressive measures without having to take court action.”

“CMA consumer law direct enforcement action is expected to further ramp up in the future, with new subscription contracts rules under the DMCCA now expected to begin applying in January 2027 and the UK government looking to expand the list of automatically banned commercial practices under the DMCCA to also include fake ‘was’ prices, invented discounts and misleading recommended retail prices, alongside already banned practices such as fake reviews,” he said.