Competition and Markets Authority v Emma Matratzen GmbH & Ors

Under the Consumer Protection from Unfair Trading Regulations 2008, reference pricing is assessed from the perspective of the average consumer. A fixed sales ratio, such as one sale at the reference price for every two discounted sales, is not conclusive. Sales at the reference price are relevant, but the court must consider the context, including whether the trader genuinely believed that the reference price was realistic, the duration of the promotion and the nature of the product. Low or zero sales at the reference price do not necessarily establish deception. Admitted infringements supplied the preconditions for an enforcement order under the Enterprise Act 2002, but the court declined to impose the requested ratio because it could capture conduct that was not an infringement and produce disproportionate consequences.

The CMA brought Part 8 proceedings under section 217 of the Enterprise Act 2002 against an online mattress seller. It alleged that Emma’s use of reference prices breached the Consumer Protection from Unfair Trading Regulations 2008 and sought an enforcement order requiring a fixed volume requirement, principally a one-to-two ratio between sales at the reference price and discounted sales. Emma admitted specific breaches but disputed a wider class of infringement and opposed the proposed order. The central issues were whether low sales at a reference price necessarily misled the average consumer and whether the court should impose the proposed order. The court found admitted Schedule 13 infringements, rejected the wider case and refused the requested ratio, leaving the terms of any further order for consequential submissions.

The court found that Emma had committed the admitted Schedule 13 infringements, so the statutory preconditions for an enforcement order existed. It nevertheless refused the CMA’s requested order imposing a one-to-two fixed volume requirement and left any alternative order for further submissions.

1. Statutory test. Regulation 5(2) required both deception, or likely deception, of the average consumer about price or price advantage and causation, or likely causation, of a transactional decision that would not otherwise have been taken. A transactional decision was not confined to the final purchase. The court applied the approach in CMA v Care UK Health and Social Holdings Ltd and another [2021] EWHC 2088 (Ch) to preparatory online actions such as clicking on product descriptions and adding products to an electronic basket. It also applied the but-for approach and accepted that collective harm could be inferred from accumulated individual infringements, following The Office of Fair Trading v Purely Creative Limited [2011] EWHC 106 (Ch).
2. Reference prices. The average consumer would regard a good deal as unavailable if the reference price was not realistic. However, sales made at the reference price were relevant but not determinative. The consumer would also have regard to whether Emma genuinely believed that significant sales could be made at that price, with objective reasonableness providing a further indication. A fixed one-to-two, one-to-three or one-to-four ratio was not a conclusive measure. The reasoning in The Office of Fair Trading v The Officers Club Ltd and another [2005] EWHC 1080 (Ch) was not authority on the Regulations, given the different legislation, business and consumer context, but was not inconsistent with the relevance of subjective belief.
3. Extent of infringement. Emma’s admitted breaches were established. The CMA did not establish the wider category of infringement alleged. Low, or even zero, sales at a reference price could occur without deception where the reference price remained realistic in the circumstances.
4. Discretion and proportionality. Sections 217(1) to (3) of the Enterprise Act 2002 gave the court a discretionary power. A one-to-two order would not address all the admitted breaches and could prohibit conduct that was not itself an infringement. Safety valves would not cure that defect. The potential sanctions and possible commercial consequences made the proposed order disproportionate.
5. Disposition. The court would not make the requested enforcement order. The parties were directed to liaise about a further hearing on whether, and on what terms, any enforcement order should be made.