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Tesco strawberry case challenges all seasonal pricing

By Rod Addy+

21-Aug-2013
Last updated on 22-Aug-2013 at 09:52 GMT

Tesco was prosecuted for misleading half price offers for British strawberries made in 2011
Tesco was prosecuted for misleading half price offers for British strawberries made in 2011

Tesco’s £300,000 fine over a misleading half-price offer for strawberries presents a nightmare for all involved in pricing seasonal products, a senior lawyer has warned.

Tesco was fined for misleading consumers over a special offer on 400g punnets of British strawberries following a prosecution launched by Birmingham City Council in 2011. A council spokesman described this as “the first case of its type to be brought before the courts”.

Between May 7 and June 19 and June 25 and August 21, 2011, the retailer displayed the strawberries for £1.99 with previous prices of £2.99 and £3.99 crossed out. A free carton of single cream was included with some offers.

Mislead shoppers

Birmingham Crown Court heard the discount could mislead shoppers because the strawberries had been sold for £3.99 for less time than they were on offer. Tesco’s Coventry Road store in Sheldon was originally prosecuted, but this was widened to UK-wide stores after a local shopper’s tip-off.

However, Dominic Watkins, senior associate and food group head at law firm DWF, who has worked with top supermarkets and food brands, told FoodManufacture.co.uk current guidelines made pricing seasonal products daunting.

On the one hand, the Office of Fair Trading (OFT) required retailers to avoid promotions lasting significantly longer than the duration products were sold on standard price. On the other, market dynamics meant seasonal items were bound to be sold off-season at higher prices because they were cheaper to produce then.

In addition, food firms are under pressure to avoid waste, making it hard to deal with surplus seasonal goods, and retailers increasingly face consumer demand for constant availability of out of season products.

‘Not going to work’

“We have got to a place where the OFT pricing principles are not going to work for those kinds of products,” said Watkins. “Soft fruit price is dramatically higher off-season than on-season and to advertise a discount is not going to be acceptable.”

Part of Tesco’s problem was that it was prosecuted under an older OFT pricing code of practice, which many saw as confusing.

The OFT adopted new pricing principles in November 2012 to clarify approaches to promotions. Eight supermarkets signed up to these principles, including Tesco.

However, FoodManufacture.co.uk understands Tesco’s fine has sparked retailers’ concerns over pricing for a broad range of food and non-food items.

And Watkins suggested new OFT requirements that products should not be advertised on discount for longer than they were sold at higher prices were difficult to meet.

Best defence

The best defence for retailers facing such cases was one of due diligence, he said. “You need to be able to demonstrate the price history, that there was a genuine sale process and a genuine reduction. If a retailer isn’t able to demonstrate this, they are going to struggle.

“This is going to make other retailers sit up and take notice.”

Owen Warnock, partner at law firm Eversheds, said the Tesco case could trigger other prosecutions. “It might set a possible precedent in the sense that people could be more interested in pursuing cases.”

Tesco pleaded guilty to four counts of breaching the Consumer Protection for Unfair trading Regulations Act 2008 and was fined £300,000, plus costs of £65,000.

It issued an official apology, stating: “We sell over 40,000 products in our stores, with thousands on promotion at any one time, but even one mistake is one too many.

“Since then, to make sure this doesn’t happen again we’ve given colleagues additional training and reminded them of their responsibilities to ensure we always adhere to the guidelines on pricing.”

Consumer group Which? said Tesco’s fine “sends a clear signal to supermarkets to play fair and make sure that their special offers really are special”.

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