The Competition and Markets Authority (CMA) findings come after a Which? campaign called on supermarkets to improve unit pricing and introduce it on promotions, including loyalty prices such as Tesco's Clubcard offers.
The CMA is now calling on the government to reform unit pricing legislation. It has also written to the retailers who it has found not fully complying with the law asking them to make changes or risk enforcement action.
Which? is joining the CMA in calling on supermarkets to act now for consumers rather than waiting for the legislation to be changed.
What the regulator says about food pricing
The CMA looked at 11 supermarkets and seven 'variety retailers' (stores that sell homeware and household goods with a more limited range of groceries).
It found issues with unit pricing across all the retailers, although it said compliance was worse among some variety retailers. It said that some problems stemmed from the unit pricing rules themselves, which leave too much scope for interpretation.
As a result, shoppers may be finding it hard to spot and compare the best deals.
The CMA’s concerns relate to:
Consistency Promotions Transparency LegibilityIn its report, the CMA has set out recommendations on the unit pricing rules and is calling on the government to reform this legislation, to help shoppers spot the best deals.
The CMA has also written to those that are not fully complying with the legislation, known as the Price Marking Order, and expects them to make changes to address its concerns or risk enforcement action.
It will publish the findings of its consumer research into the use of unit pricing this autumn.
Sarah Cardell, CEO of the CMA, said: 'With so many people struggling to feed their families, it’s vital that we do everything we can to make sure people find the best prices easily. We’ve found that not all retailers are displaying prices as clearly as they should, which could be hampering people’s ability to compare product prices.
'We’re writing to these retailers and warning them to make the necessary changes or risk facing enforcement action. The law itself needs to be tightened here, so we are also calling on the government to bring in reforms.'
Find out more:Why unit prices are important
Which? research last year found that 72% of people couldn’t spot the cheapest fizzy drinks in a range of real-life examples from supermarkets, where some didn't have clear unit pricing. And unit pricing is important because shoppers could pay up to 346% more per gram or millilitre by going for different pack sizes of exactly the same product.
We found issues with unit pricing across all supermarkets. There were instances where it was missing, hard to read or inconsistent.
But Tesco stood out because it doesn't have unit pricing on its Clubcard offers, which now form almost all of the promotions it offers on groceries. In contrast, Sainsbury's launched a similar scheme in April called Nectar Prices and these do include unit prices both in-store and online.
Tesco's lack of unit pricing on the vast majority of its grocery promotions not only makes it needlessly difficult to compare what’s best value, but could also mean it’s breaking the law, Which? believes.
Which? thinks Tesco's decision not to include unit pricing – the price per 100g or 100ml, for example – on its Clubcard offers could in some cases be a misleading practice under the Consumer Protection From Unfair Trading Regulations 2008 (CPRs). That's why we reported Tesco to the CMA earlier this year, and now welcome the regulator's announcement urging supermarkets to introduce unit pricing on all promotions, including loyalty offers.
Find out more:What's happening to supermarket food prices?
Our research earlier this month showed annual supermarket food inflation was at 15.4% in June. This has slowed slightly since it peaked at 17.2% in March – but this time last year prices had already started spiralling, so a year-on-year comparison doesn't show the true extent of the inflation shoppers are facing.
When we looked at a two-year period, going back to when the cost of living crisis began, we found average prices had actually gone up by a whopping 25.8%.
The CMA has assessed how retail competition is working in the UK grocery sector, particularly between supermarkets such as Aldi, Asda, Lidl, Morrisons, Sainsbury’s and Tesco. It said although food price inflation is at historically high levels, evidence so far indicated that this was not driven by competition issues.
The CMA found operating profits in the retail grocery sector fell by 41.5% in 2022/23 compared with the previous year, while average operating margins fell from 3.2% to 1.8%. This is due to retailers’ costs increasing faster than their revenues, indicating that rising costs have not been passed on in full to consumers.
And it said now some costs were starting to fall, there were signs that grocery retailers were planning to start rebuilding their profit margins, warning it be would be monitoring this carefully to ensure that shoppers benefited.
The CMA is now planning to examine competition for individual product categories and across the wider grocery supply chain.
Find out more: What else is Which? campaigning for?Which? has been campaigning for supermarkets to do more to help customers, including introducing clearer pricing and stocking essential budget-range items in convenience stores.
Which? is calling on the government to ensure that reformed unit pricing legislation is fit for purpose, and reflects current trading practice so that transparent pricing becomes a priority.
Sue Davies, Which? head of food policy, said: 'Which? has repeatedly exposed inconsistent and confusing supermarket pricing, which could make it difficult for shoppers to easily work out which products offer the best value, so it’s positive to see the Competition and Markets Authority calling for immediate action from the supermarkets on this issue.
'The supermarkets must finally do the right thing by their customers and urgently act on the areas highlighted by the regulator. This includes the need to put unit pricing on promotions, such as on loyalty card offers and multi-buys, and make unit pricing clearer and more consistent.
'The regulator also warns that customers who rely on expensive convenience stores aren't fully benefiting from strong competition between supermarkets. Supermarkets can address this immediately by bringing in a range of budget-line products that support a healthy diet to their convenience stores.
'Government must act swiftly on its promise to update pricing rules and close the loopholes that are allowing supermarkets to unnecessarily confuse shoppers, and the regulator must be ready to take enforcement action if the supermarkets don't act to quickly improve their pricing practices.'
Do you want to see your supermarket take action?source https://www.which.co.uk/news/article/regulator-clamps-down-on-supermarket-pricing-following-which-campaign-ave4V6M3AhS2