Office of Fair TradingFleetbank House2-6 Salisbury SquareLondon EC4Y 8JXSwitchboard: (020) 7211 8000www.oft.gov.uk
Principles on food pricing display and promotional practices
The following principles are applicable to food and drink (alcoholic and non-alcoholic) produce, for human consumption off the retail premises (that is, not in-store catering).
Internal reference pricing
‘Internal reference pricing’ means those promotional communications (includingadvertisements, displays, shelf-edge labels, etc) which use a past selling price(implicitly or explicitly) to convey the fact that the current selling price is a valueoffer, for example through the use of such claims as ‘was £3, now £2’, ‘halfprice’, ‘discount’, ‘reduction’, etc.
Prices should never be artificially manipulated so that future planneddiscounts are made more attractive (for example, actively ‘establishing’ ahigher price in order to advertise a later ‘discount’, where that later ‘discount’price is in fact just the normal selling price of the product).Good example Bad exampleA retailer reduces the price of theproduct below its genuine sellingprice for a limited period andaccordingly promotes this as aspecial offer price reduction.In order to advertise a discount, aretailer actively establishes a higherprice by selling it in a limited numberof stores with low prominence andwith low expectations of sales, andthen rolls the product out across allstores at a lower price and with anadvertised discount. There would beparticular concerns where this patternof limited distribution/high price androll-out/low price is repeated (‘yo-yopricing’).A retailer reduces the price of theproduct below its previous genuineselling price until stock is cleared,In order to advertise a discount, aretailer actively establishes a higherprice when the product is out-of-