OFT closes investigation into retailers

19/14 For immediate publication 21 March 2014

Furniture and Carpet Retailers change

pricing Practices AFTER OFT Investigation

Five furniture and carpets retailers have changed their pricing practices following an OFT investigation.

A Share & Sons Ltd (trading as 'SCS'), Carpetright Plc, Dreams Ltd, Furniture Village Ltd and Homestyle Operations Ltd's trading brands 'Harveys' and 'Bensons for Beds' have each confirmed their commitment to using genuine reference prices and, without any admission of liability, have made changes to their reference pricing practices. The OFT has therefore closed its investigation.

Reference prices are used by retailers across their sector to advertise a bargain to shoppers, for example by comparing a lower current price against a higher past price such as 'Sale, Was £800, Now Half Price £400'.

The OFT believes that consumers should be able to trust that such price comparisons are fair and meaningful and that the advertised savings (or 'price advantage') are genuine. Improper use of reference prices can mislead consumers, for example in circumstances where the 'discounted' price is in fact the normal retail price of a product.

Gaucho Rasmussen, OFT Director, Goods and Consumer Group said: 'Retailers advertise bargains and discounts by referring to a previous or future higher price. It's a powerful marketing tool which, when used properly, provides a helpful and easy way to demonstrate to shoppers the value of discounts and savings.

'We are therefore pleased that these retailers have confirmed their commitment to using genuine prices.'

Alex Chisholm, Chief Executive of the Competition and Markets Authority (CMA), which succeeds the OFT on 1 April, said:

'The CMA will monitor pricing practices within this sector to check whether businesses are complying with their legal obligations. Companies are advised to satisfy themselves that their practices are in line with the law because failure to do so could risk enforcement action.'

Notes:

1. There are further details on this case, including a non-exhaustive list of factors that the OFT considers when assessing whether a reference price is genuine, on the project webpage.

2. The Consumer Protection from Unfair Trading Regulations 2008 contain a general prohibition against unfair commercial practices and, specifically, prohibitions against misleading actions, misleading omissions and aggressive commercial practices. The Regulations are enforceable through the civil and criminal courts. Further information and advice for businesses can be found here.

3. On 1 April 2014, the Competition and Markets Authority (CMA) will

become the UK's lead competition and consumer body. The CMA will

bring together the existing competition and certain consumer protection

functions of the Office of Fair Trading and the responsibilities of the

Competition Commission, as established by the Enterprise and Regulatory

Reform Act 2013.

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