The Competition and Markets Authority (CMA) has published an update to its dynamic pricing project (previously commented upon here) alongside guidance for businesses.

Whilst the project was launched in the wake of the media uproar over Ticketmaster’s use of dynamic pricing for the Oasis reunion concerts, the CMA acknowledged at the time that the practice was far from rare, and that many sectors rapidly and frequently adjust their prices to respond to demand.

In its update, the CMA recognises that dynamic pricing “can be consistent with effective competition and good outcomes for consumers”, and outlines why and how businesses employ it. However, it outlines a number of circumstances which are more likely to raise concern and potentially prompt the CMA into taking action, including when:

• consumers are unaware that dynamic pricing is being used or how it may affect prices so cannot make informed choices;
• consumers feel pressured to make quick decisions because prices may rise suddenly;
• vulnerable consumers are particularly disadvantaged such that they pay higher prices than others; and
• dynamic pricing is used to obtain or maintain market power or reduce new entry in a market, which results in higher prices, lower output and harm to consumers, businesses and the UK economy.

The CMA is clear that consumer law does not prohibit dynamic pricing. However, it points to provisions in the Digital Markets, Competition and Consumer Act 2024 that prohibit misleading consumers, whether through giving them false or misleading information about a pricing strategy or failing to give them information they need to make an informed decision. Whether or not additional measures are required to tackle dynamic pricing is touched on briefly, as the CMA suggests that rather than broad changes to consumer law, “sector-specific interventions” might be more appropriate.

As for how businesses can ensure that they stay on the right side of the law (and the CMA), guidance has also been published setting out tips for those using dynamic pricing, such as being transparent about pricing (including that prices can change), presenting information clearly, and making sure that people are told what they will actually pay at the right points in the purchase process.

To read more, click here.