CMA says it will re-consult on some aspects of new pricing regime and provide a clear framework for compliance with the rest of the regime.

What has happened?

• The Digital, Markets, Competition and Consumers Act (DMCCA) includes new rules prohibiting so-called "drip pricing" - the practice of giving a low headline price but then proceeding to drip additional charges throughout the sales process so that the consumer ends up paying more.

• Businesses had been gearing up to comply with the new rules which come into force on 6 April 2025, including closely reviewing draft guidance issued by the regulator, the Competition and Markets Authority (CMA), on how the rules might be applied in practice.

• However, the CMA has recently announced that it will re-consult on some aspects of the draft guidance. In particular, it has said that (a) by 6 April 2025, it will provide clear guidance for compliance with aspects of the law which are already well understood and largely unchanged and (b) in the summer, it will run a further consultation on revised draft guidance for those aspects of the regime that have created more uncertainty (including pricing of fixed-term periodic contracts), with a view to producing finalised guidance in this area in the autumn.

• In the meantime, the CMA will only take enforcement action against drip pricing which clearly breaches the rules in line with the April guidance. Note, however, that such action can now include the imposition of very significant fines by the CMA on those who get it wrong (without the need for the CMA to take court action).

• Businesses with practices which are clearly prohibited such as those who add on genuinely unexpected and untrailed mandatory charges at the end of a purchasing journey should continue with their compliance efforts. Others with more complex pricing models (including those who offer fixed-term periodic contracts) might – depending on all the circumstances - want to wait for further clarification on the CMA's expectations in the coming few weeks. 

Here we consider what the DMCCA says about drip pricing, what concerns it addresses and what businesses should be doing in light of the CMA's recent announcement.

What is the DMCCA?

The DMCCA introduces new rules for unfair commercial practices, replacing and updating the Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs). The new provisions seek to achieve a high level of consumer protection and maintain much of the scope and effect of the CPUTRs, with some amendments, including a new prohibition of drip pricing. It is worth remembering that the rules on unfair commercial practices apply to all physical and non-physical products, including goods, services and digital content.

What is the concern about drip pricing?

The concern about drip pricing is that it can lead to consumers paying more than what was initially advertised especially as consumers are likely to complete a purchasing process once they have devoted significant time and effort to it. This can, in turn, impede competition.

How is drip pricing dealt with in the DMCCA?

The drip pricing provisions are contained in the section of the DMCCA on material omissions from the invitation to purchase. The DMCCA provides that an invitation to purchase omits material information (and so is automatically unfair) if (considering any limitations arising from the means of communication and steps taken to overcome those limitations) it omits any of the following information:

1. The total price of the product (except where 2. below applies). The total price includes any fees, taxes, charges or other payments that the consumer will necessarily incur if the consumer purchases the product.
2. If, owing to the nature of the product, the whole or any part of the total price cannot reasonably be calculated in advance, how the price (or that part of it) will be calculated, such information to be (a) such that it enables the consumer to calculate the total price, and (b) set out with as much prominence as any information that is set out in compliance with 1. above.
3. Any freight, delivery or postal charges, including any taxes, not included in the total price of the product but which the consumer may choose to incur (or where those additional charges or taxes cannot reasonably be calculated in advance, the fact that they may be payable).

Information can also be omitted if it is provided in a way that is unclear or untimely or in such a way that the consumer is unlikely to see it.

The previous wording in the CPUTRs was less clear - only stating on its face that the "price" must be included in the invitation to purchase, not the "total price". The DMCCA also makes express what this total price should include.

Importantly, there is no longer any requirement to show that the omission of material information from an invitation to purchase is likely to cause the average consumer to take a transactional decision that the consumer would not have taken otherwise. This widens the scope of the prohibition (making it easier for businesses to breach the rules).

What is an invitation to purchase?

Knowing what constitutes an invitation to purchase will be key for compliance. An invitation to purchase is any communication that gives the consumer information about the characteristics of a product and its price and which enables, or purports to enable, the consumer to decide whether to purchase the product or take another transactional decision in relation to the product. (This definition has been slightly tweaked compared to the CPUTRs, although the change should generally not make much difference.)

Other regulatory interest in pricing claims

Even before the DMCCA, the CMA had an active interest in all things pricing. It has secured undertakings from Simba Sleep relating to its online pricing practices (price reduction claims) and has issued court proceedings against Emma Sleep over similar issues. It has also published an open letter to all UK online businesses, reminding them of their obligations under the law in relation to price reduction and urgency claims.

Separately, the CMA opened a project on dynamic pricing in November last year (in addition to the investigation into Oasis ticket sales). It has also shown an interest in unit pricing (which coincides with the Price Marking (Amendment) Order 2024 coming into force on 1 October 2025). It has published an open letter to grocery retailers on the use of unit pricing and it also has an open project on unit pricing.

What do businesses need to do?

• Businesses with practices which are clearly prohibited such as those who add on genuinely unexpected and untrailed mandatory charges at the end of a purchasing journey should continue with their compliance efforts. Reference should be made to section 9 of the current draft guidance and (when published before 6 April 2025) the revised guidance.

• Marketing materials, adverts, and websites might all need to be updated. Remember that there might be more than one invitation to purchase during a consumer's purchasing journey and that each invitation to purchase must comply.

• Staff (including sales/marketing teams) should be trained on the new rules and robust internal compliance mechanisms should be established.

• Those businesses with more complex pricing models (including those who offer fixed-term periodic contracts) might want to wait for further clarification on the CMA's expectations in the coming few weeks before implementing changes. Much will depend on what pricing model is used and how that maps onto the requirements in the DMCCA (which, obviously cannot be changed) and previous requirements under the CPUTRs. 

• Further clarity on what needs to be done now and what can wait pending the outcome of the new consultation is expected from the CMA (including by reference to what is missing from section 9 of the revised guidance). 

• More generally, businesses should take note of the CMA's interest in pricing, particularly in light of its new direct enforcement powers under the DMCCA, including the power to impose significant fines for infringements.