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Many of our readers will remember the action that the CMA took in the online mattress market to deal with issues regarding online choice architecture (such as countdown timers and other pressure selling tactics) and pricing issues. One area of controversy involves 'reference prices' i.e. "Was £X, NOW £Y" type claims.
The CMA's guidance for that sector states that to ensure a reference (higher) price reflects the genuine price of the product, traders must make sure that any products, including bundles of products, that are offered for sale using a 'was/now' price, have actually been sold in sufficient volume, over a sufficient duration, at or above that reference price. These sales should be made in the same way (e.g. on the same website) as that used for the promotion and immediately before the discount begins.
In particular, many will be aware that the CMA has invented (critics might say 'dreamed up' - ahem) a new 1:2 ratio for discount claims.
The pricing guidance which the CMA published following its investigations in 2024 was controversial (see here) and it will be of great interest to see if the courts agree with the CMA.
In a nutshell, when an item is claimed to be on sale using a "was £X, now £Y" mechanism, the CMA believes it's fair that if you sell 100 at £X, you should only be able to sell around 200 at the lower price - after that, you the seller should stop making that price claim/comparison.
Retailers and brands around the world are aghast when you explain this to them, because the rule doesn't exist anywhere else, and it didn't appear to apply in the UK before the CMA made it up after consultation with various economists.
Readers can consider for themselves what their expectations are when it comes to claims such as "Was £100, NOW £50". Is it, for example, that:
- the discount will go on for no longer than the full price applied and a significant number of that item were sold at the higher price (e.g. a handful, or at least 10-20% were sold at the higher price); or
- going a step further, if 100 items were sold at the full price, no more than 200 will be sold at the discounted price...?
The worry for everyone is that if the CMA applies that ratio in the online mattress sector, it might decide to apply it to other sectors. The CMA has been careful not to confirm or deny whether it intends to do this... but many are losing sleep over it!
In a dramatic twist, one of the mattress companies under investigation (Emma Sleep) decided to push back. They refused to sign an undertaking to confirm that they would comply with the CMA's new '1:2 ratio', so the CMA are pursuing legal action against them. In simplistic terms, it means a court will decide whether it is reasonable for the CMA to apply this 1:2 ratio to this advertiser (and presumably the wider sector).
It relates to the law as it stood before the DMCC Act, but, importantly, it will inform how the CMA will interpret the DMCC Act. And what retailers have to do to keep track of their discount claims in a world of dynamic pricing and frequent sales/offers.
It isn't clear how much clarity we will get from the ruling, but it's safe to say that until we have a decision, the CMA is unlikely to pursue any action on this point under the DMCC Act against those who fall short of its new standard (unless they are really pushing their luck and falling short of the ASA's current standards, which align with scenario (a) above).
Of course, under the new regime under the Digital Markets, Competition and Consumers (DMCC) Act 2024, the CMA does not have to go to court first - it can decide for itself if consumer laws have been broken, and take enforcement action... so this is one of the few and final chances a court will have to set the CMA on the right path. In future, the role of the courts may be limited to appeals brought by the brave few (and deep-of-pocket).
So, what's the latest?
Sorry, that was a bit of a long answer - we hope you didn't nod off!
The update is that we now have a date for the Emma Sleep trial, which is set for 6 June 2026. It has been listed for three days. By the time we have a judgment, given the date is dangerously close to summer recess time, this case could sleepwalk into the Autumn of 2026... so it could be a while before we know the outcome of the case and whether the courts agree with the CMA.
Don't worry, while you sleep, we'll stand guard and bring you any updates.
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