UK regulator finds no evidence of misleading supermarket loyalty prices

Britain's competition regulator announced on Friday (26) that its ongoing review of supermarket loyalty prices is unlikely to uncover widespread evidence of misleading promotions.

Loyalty schemes, which offer significantly lower prices for members, have become extremely popular among the UK's largest supermarkets. The majority of customers now use these schemes, and an increasing number of products are included in them.

The Competition and Markets Authority (CMA) initiated the review in January to examine the impact of loyalty scheme pricing used by many UK supermarkets, including market leader Tesco and second-largest Sainsbury's, which offer discounts exclusively to loyalty card members. The CMA plans to publish a full report on its findings in November.

The watchdog considered whether there are pricing practices that indicate the non-loyalty, or non-member, price may have been artificially inflated to make the loyalty price appear misleadingly attractive.

It looked at what happens to prices before, during, and after a product goes onto a loyalty price promotion.

"Our analysis – involving thousands of loyalty price promotions – is  ongoing, but the results to date suggest we are unlikely to identify widespread evidence of loyalty promotions that mislead shoppers in this way," the CMA said.

But the regulator said it had seen examples of retailers alternating between so-called "was /now" promotions available to all shoppers and loyalty price promotions.

"This raises questions as to what the ‘regular’ price is for the product and therefore whether the claim saving for the ‘was /now’ promotion is genuine," the CMA said, adding it was looking further into this issue.

Over 22 million UK households have a Tesco Clubcard and over 80 per cent of Tesco's UK sales involve them.

Tesco, which has a 27.7 per cent share of the UK grocery market, currently offers over 8,000 Clubcard Prices deals each week, while Sainsbury's, which has a 15.3 per cent share, has rolled out Nectar Prices to about 7,000 products.

Shares in Tesco and Sainsbury's were both up 0.2% in early trading.

Last year, the CMA ruled that Britain's high food price inflation had not been driven by weak retail competition, vindicating supermarkets' rejection of claims they had profiteered during a cost of living crisis.

Separately on Friday, the CMA said UK drivers were still paying too much for road fuel. (Reuters)