UK CMA finalises guidance on price transparency under DMCCA and begins enforcement action

The Competition and Markets Authority (CMA) has finalised its price transparency guidance under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) and updated its guidance on unfair commercial practices (UCPs) to reflect this. 

Publication of the guidance on price transparency completes the CMA's phased approach to delivering support for businesses on interpreting the pricing requirements of the new UCPs regime under the DMCCA as they relate to "drip pricing". It follows its consultation on price transparency in the context of invitations to purchase over the summer.  

The finalised guidance covers not only the concepts of "drip pricing" and "partitioned pricing", but also the core obligation on traders to present a total price wherever an invitation to purchase is made (including mandatory fees and charges). The CMA has made some changes to the final guidance to address issues raised by stakeholders in response to the consultation and provided further examples for both online and offline journeys. The regulator has also launched enforcement action targeting online pricing practices.

Invitation to purchase

The final guidance clarifies that advertisements are not necessarily invitations to purchase. If the advert does not include a price or the characteristics of a specific product are not indicated (for example, an advert promoting a trader's brand), it will not be an invitation to purchase and the price transparency rules do not apply.

The CMA has also provided more information on who is responsible for making a compliant invitation to purchase: responsibility lies with the trader making it, even if it is not the seller (for example, a brand owner advertising a product sold by third party retailers, price comparison websites, online marketplace operators, or influencers). Sellers may be additionally responsible if the marketing is done on their behalf or in their name. Invitations to purchase directed at UK consumers must comply, even if the trader is located overseas. 

The regulator has also clarified that any limitations on availability should be made clear, and "from" prices require a significant proportion of goods to be available at that price. While the limitations of the medium in which the invitation to purchase is presented (such as space or time) may justify the omission of certain material information, there is a high bar for omitting information as to price, given its importance. In particular, the CMA notes that material information required by section 230 of the DMCCA should not be omitted in favour of other, non-mandatory, information.  

Total price and 'nature of the product'

Consumers must be given a total price in each invitation to purchase that includes all mandatory fees and charges. The exemption for prices that cannot reasonably be calculated in advance applies only where this is genuinely due to the "nature of the product". However, charges such as administration or service fees that are applied across multiple products will rarely meet this test. The trader must therefore establish or present these prices in such a way as to allow it to calculate them in advance and include them in the total price.

The CMA has also clarified that the UCPs provisions cover how a product is marketed and do not regulate payment mechanisms. Therefore, the requirement to provide the total price does not preclude payment in instalments, using intermediaries to collect part of the price, or charging pro‑rata amounts where the consumer uses a service for less time than advertised.

Delivery charges

The final guidance distinguishes mandatory, optional, and variable (but mandatory) delivery charges, and gives additional written and visual examples of ways to comply with the rules for single and multi‑product purchases, across bricks‑and‑mortar settings, online marketplaces, web browsers and apps. 

It retains the use of "floating baskets", dynamic "add to basket" buttons and automatic displays of consumer "baskets" alongside the total price, as acceptable methods to present a "running total". In contrast, expandable disclosures and linked pages containing material pricing information are viewed by the CMA as unreliable means of complying with the requirements. All relevant pricing information must be shown clearly, upfront and in a way that consumers are likely to see. 

The CMA reinforces the fact that including delivery charges in the total price is a DMCCA requirement that also covers early-stage advertising. For consumers purchasing multiple products as part of a single order, traders can either: show the base price alongside the total price inclusive of delivery; show the base price, the delivery charge and a rolling total for the order; or remove the delivery fee and incorporate its cost into the base cost of the products (in effect, offering "free delivery").

Periodic and monthly pricing

For minimum term contracts with periodic payments (for example, monthly) the total price can be presented as either: 

• The cumulative price that the consumer will have to pay over the entire minimum length of the contract (for example, 12 months), inclusive of all mandatory charges in that period. In the CMA's view, this is the safest approach to compliance and does not prevent the trader from also providing other pricing information, for example the monthly price, provided that the cumulative price is clearly shown.
• The total price that the consumer pays for each period, alongside a prominent statement of the number of months the consumer is committed to pay that price for. Any one-off fees (such as an administration, set up or installation fee) must be included in the advertised price (for example, a first periodic payment that incorporates the one-off fees, plus a statement of how much the subsequent periodic payments will be).

Following consultation concerns about potential overlaps with existing sector regulations, the CMA engaged with Ofcom and the Financial Conduct Authority (FCA). The CMA has not identified any incompatibilities between the DMCCA price  transparency requirements and existing sector regulations such as Ofcom's price transparency and periodic pricing rules and the FCA's consumer duty and consumer credit rules. It expects the relevant regulators to lead on compliance in their respective sectors, applying any sector‑specific rules alongside or in addition to the DMCCA. Likewise, the CMA stresses that traders that are subject to sector regulation must comply with both the DMCCA and sector-specific regulations.

Consent for optional extras when selling online

If traders offer optional extras (as opposed to mandatory charges) linked to the main product, such as insurance, faster delivery or charitable donations, they must obtain express consent from consumers to these additional payments before charging them.

Traders cannot use pre-ticked boxes or other forms of automatic opt-in for these optional extras. The CMA has published separate guidance on requirements for traders when selling optional extras online, which is accompanied by visual examples of compliant and non-compliant practices. 

Enforcement is under way 

Alongside the publication of its final guidance, the CMA has launched enforcement action, using its new direct enforcement powers under the DMCCA, targeting online pricing practices such as drip pricing and pressure selling. It has reviewed more than 400 businesses across 19 sectors and found potential issues in 14 sectors. Based on this work, the regulator has: 

• Opened investigations into eight businesses that it suspects may have broken consumer law in relation to their use of fees, misleading time-limited offers and/or the practice of automatically opting consumers in for optional charges.
• Sent advisory letters to 100 businesses outlining its concerns about their use of additional fees and some online sales tactics. Sectors and key areas of spending under scrutiny include holidays (including package travel), driving schools, homeware retailers, rail travel, parking and airport parking, bus and coach travel, luggage storage providers, cinemas, live event tickets, food and drink delivery companies, letter and parcel delivery, gyms and fitness, fashion, and online vouchers.

The CMA is now able to determine whether a breach of consumer law has occurred without going through the courts and can impose fines for non-compliance of up to 10% of global turnover.

Osborne Clarke comment

The CMA says that there is more than one way to comply with the UCPs provisions under the DMCCA. Its guidance focuses on explaining the core principles underpinning the legislative requirements and provides non-exhaustive examples of lawful practices in different contexts. 

However, while businesses may adopt different approaches to presenting pricing information, they must comply with the clear requirements of the DMCCA, including the obligation to provide a total price in each invitation to purchase. With the CMA actively investigating pricing practices and now being empowered to impose significant fines, businesses should act promptly to ensure that they include all mandatory fees and charges (which may include delivery fees) when presenting their prices so as to provide the consumer with the total price at every stage of the customer journey. Businesses should also remember the requirements relating to optional extras.