Out-Law News 1 min. read
23 Aug 2013, 2:30 pm
The Office of Fair Trading (OFT) said it was investigating whether the unnamed companies had engaged in "misleading reference pricing" in breach of the Consumer Protection from Unfair Trading Regulations.
The OFT has prioritised taking action against pricing practices that "act as a barrier to fair choice and effective competition". It said its investigations build upon the findings of its 2010 market study into the advertising or prices.
"Reference pricing refers to those offers which aim to demonstrate to consumers that they offer good value by including a reference to another, typically higher, past or future price (such as 'Was £800, Now Half Price £400' or 'Now £400, After Event Price £800')," the OFT said in a statement. "These investigations have been progressing. We have now sent consultation letters and draft undertakings to a number of businesses. It should not be assumed at this stage that any breach of consumer protection legislation has occurred."
The Consumer Protection from Unfair Trading Regulations prohibit unfair, misleading or aggressive selling practices. The OFT has the power to initiate legal proceedings against companies in breach of the regulations.
A commercial practice is deemed to constitute a "misleading action" if it "contains false information and is therefore untruthful in relation to" one of a range of listed matters, such as "the price or the manner in which the price is calculated" or "the existence of a specific price advantage".
Even if information presented is "factually correct" the commercial practice can still be deemed to be misleading "if it or its overall presentation in any way deceives or is likely to deceive the average consumer" in relation to price calculations or advantages or any of the other listed matters.
The Regulations further prohibit businesses from making "misleading omissions" which omit or hide "material information" from disclosure or where the material information is presented "in a manner which is unclear, unintelligible, ambiguous or untimely".
'Material information' is defined, under the Regulations, as "information which the average consumer needs, according to the context, to take an informed transactional decision" as well as any information businesses are required to present in commercial communications in order to comply with EU law.