Call for Government reforms to unit pricing

What is unit pricing?

The Competition and Markets Authority (CMA) has published a report on its work into unit pricing. Unit pricing is a labelling system for displaying the cost of different products by reference to standard units of weight or volume. Unit pricing is largely regulated by the Price Marking Order 2004 (PMO) in Great Britain (and by the Price Marking Order (Northern Ireland) 2004 in Northern Ireland). The PMO requires retailers to display the unit price for most grocery products, as well as the selling price of the products, on labels in-store and online.

According to the CMA, at times of high inflation and when shoppers are looking for the most competitive deals, it is critical to be able to shop around and compare prices with confidence. One important driver of this is the ability to compare products by reference to unit prices.

The report sets out the CMA’s findings from its review of grocery retailers’ current unit pricing practices and identifies compliance concerns which is has asked Government to address.

What problems with unit pricing have been identified?

Some of the problems stem from the unit pricing rules themselves, which allow unhelpful inconsistencies in retailers’ practices and leave too much scope for interpretation. As a result, shoppers may be finding it hard to spot and compare the best deals. The compliance problems can be grouped into the following categories:

• Consistency – examples of incorrect units of measurement being used (grams and millilitres as standard when the PMO requires most products to be unit priced by kilogram and by litre) and different unit metrics being used for the same type of product making it hard for shoppers to compare prices on a like-for-like basis.

• Transparency – examples of missing or incorrectly calculated unit pricing information.

• Legibility – examples of unit prices in-store which are difficult to read and certain pages on some websites not providing a unit price alongside a selling price until individual items are selected.

• Promotions – the CMA found retailers are taking different approaches to displaying unit prices for products on promotion both in-store and online, with some retailers not displaying unit prices for discounted products at all.

Proposed solutions

As a result of the CMA review, recommendations are being made to Government to reform the PMO and related legislation to improve unit pricing. The proposed changes will help food and drink businesses in complying with their obligations under the PMO (as well as helping shoppers access information that is easier to compare and more meaningful when making choices during a shop).

In relation to the consistency of unit pricing information, the CMA recommends that Schedule 1 of the PMO is updated, along with the related weights and measurements legislation, to ensure that only one unit measurement can be used per product type across all retailers and across all sales channels. The definition of unit price in Article 1(2) of the PMO should also be reviewed, and other relevant weights and measures legislation is updated, to ensure that shoppers are able effectively to compare unit pricing of the same type of product in-store, and to reduce the scope for retailers to unit price items of the same type by item or by weight.

How we can help

Although changes to the legislation may take some time, the CMA has, at the time of publishing its report, issued an open letter to food and drink retailers calling on them to comply with their obligations under the PMO. If you would like to discuss how this affects you or any other aspect of competition law please give Richard Naish  or Sarah Ward a call.

Explore more updates for food and drink businesses in this edition of our Food & Drink Update.