OFT market study on Price Comparison websites

[Amethyst]

The Office of Fair Trading: Advertising and Pricing market study QAs

We are currently consulting with stakeholders on the scope and would welcome written comments on the scope of the study by the 18 September 2009. We intend to finalise the scope and launch the study in autumn 2009.
At this stage we are minded to include several pricing practices which may lead to consumer detriment such as:

• 'Drip' pricing tactics, where consumers only see an element of price upfront but price increments 'drip' through during the buying process.
• 'Baiting' sales which entice consumers with promises of discounts but then have very few items on offer at the sale price.
• Reference prices, that is, price promotions which create a relatively high reference price compared to sale price, such as 'was £50, now £20', half price, 50% off, or £20 compared to a recommended retail price of £50.
• Time limited offers such as sales which finish at the end of the month or special prices which are available for one day only.
• Complex pricing where it is difficult for consumers to assess unit price, for example three for two or 'non-inclusive' prices where lots of separate (often necessary) components are needed to generate a final price.

We also intend to look specifically at price comparison sites which may be complicated by the use of these practices.
We are also considering including the use of personal information in advertising and pricing. In particular, we may look at behavioural advertising where information on a consumer's online activity is used to target the internet advertising they see. We may also examine the practice of tailoring prices to individual consumers on the basis of their personal data.
Finally, we are minded to look at the use of opt-in or opt-out boxes for example, for annual renewals, add-on charges or agreements to pass on personal details to third parties.
For each of these topics, noting any differences between the online and offline world, we will consider:

• Trends in the prevalence, and likely development, of the practice.
• The potential benefits and harm to consumers arising from the practice.
• Existing regulation which may apply to the practice.
• The types and effects of possible interventions.

For each practice, we may focus on one or more key industries, such as furniture, travel, electrical goods or entertainment.
We will exclude broadcast advertisements which are regulated by Ofcom. We also intend to exclude issues relating to misleading advertising of quality. Neither do we intend to look at terms and conditions or other issues which do not relate to either advertising or pricing.