Regulating seasonal discounts and pricing practices

Answer

As the festive season approaches, retailers are gearing up for the biggest shopping events of the year – with Black Friday just behind us and post-Christmas sales on the horizon.

These periods are often dominated by bold marketing claims, such as “was £100, now £50!”, “last chance to buy at this price” or “only two left!” – which, if you’re anything like me, can be very tempting and sometimes pressure you into making purchases you wouldn’t ordinarily make (I already have a pile of returns from Black Friday!).

But behind the festive sparkle of seasonal promotions lies a serious question: how do businesses ensure these offers are credible and compliant with the law?

The DMCC: a new era of enforcement

The Digital Markets, Competition and Consumers Act 2024 (DMCC), and the Committee of Advertising Practice (CAP) Code are two key frameworks that shape how businesses interact with consumers in the UK. They’re designed to ensure that commercial practices are fair, transparent and enable consumers to make informed decisions.

The DMCC is the most significant update to consumer law in a decade. One of its key focuses is banning what it terms “unfair commercial practices” and “omissions of material information from an invitation to purchase”. In essence, businesses must avoid misleading tactics that distort consumer perception. For example, artificially inflating original prices before applying a discount or using phrases like “limited time” when the offer is ongoing. The DMCC requires that pricing strategies are genuine, honest and not misleading. The DMCC also gives the Competition and Markets Authority (CMA) stronger powers to enforce consumer protection rules. The CMA can now impose direct civil penalties for breaches, making enforcement faster and more impactful.

The CAP Code compliments the DMCC, with its primary focus being on fair, clear and truthful advertising. This means adverts shouldn’t exploit consumer vulnerabilities or mislead through omission, they should present information in a way that’s easy to understand, and all claims must be accurate and substantiated. Whether it’s about price, product performance or availability, transparency is key.

This matters because the CAP Code already requires honesty in advertising and, under these rules, any comparison between a previous price and a current offer, or urgency claims, must be genuine and verifiable. The DMCC then raises the stakes – retailers that fail to comply risk significant GDPR-style fines (up to 10% of global turnover) and, perhaps most importantly, severe reputational damage and loss of consumer trust – of which is key in maintaining credibility during the most competitive retail season.

Together, these frameworks promote responsible advertising and build trust between businesses and consumers. They highlight how regulation shapes everyday business practices and how legislation seeks to protect us as consumers.

Compliant discounts and urgency claims

Seasonal promotions thrive on urgency and perceived value. But under the DMCC, retailers must tread carefully. Claims like “50% off” can no longer rely on inflated benchmarks. The ‘was’ price must have been charged for a ‘reasonable period’ and businesses must hold evidence to prove it.

What counts as a reasonable period is open to interpretation, but the ‘1:1 price promotion rule’ is a common compliance guideline. It suggests that the original price should’ve been charged for at least as long as the discounted price. For example, if a retailer runs a two-week sale, the product should’ve been sold at the original price for two weeks beforehand. This helps demonstrate that the ‘was’ price is a genuine benchmark, not an inflated figure created solely to make the discount look bigger (think of those websites that always seem to have a sale on and never actually sell products at their ‘was’ price!).

False urgency, such as claiming limited stock when plenty is available or “last chance to buy at this price”, could also trigger enforcement action if it can’t be substantiated (eg, through stock records). This is because such statements create a false sense of urgency, which can pressure consumers into making a purchase they might not otherwise have made.

Current and previous examples

There’s no shortage of Advertising Standards Authority (ASA) rulings on the application and breach of CAP Codes.

More importantly, the CMA has significantly stepped up its consumer protection and enforcement activity. Only a few weeks ago, the CMA demonstrated its commitment under the DMCC, launching investigations into eight companies over online pricing practices and issuing more than 100 advisory letters warning others to fix their practices or face enforcement. The crackdown on misleading pricing is here and enforcement is happening now.

Why this matters for commercial awareness

Understanding the DMCC and CAP Code isn’t just for lawyers – it’s for anyone who wants to see how regulation shapes business behaviour and protects consumers. Pricing strategy, marketing campaigns and compliance are deeply interconnected.

So, next time you see a supposed deal, take a moment to consider whether the discount (the ‘was’ price) is genuine and whether any pressure tactics are likely to be substantiated.

Katie Phipps is a trainee solicitor at Shoosmiths.