21 August 2013

Tesco has been fined £300,000 and ordered to pay £65,000 in costs after it was found to have run a “false and misleading” promotion on strawberries. This case serves as an example to all retailers who want to put perishable goods on promotion with a deep discount.

In the summer of 2011, a pensioner named Daphne Smallman complained to Trading Standards after seeing strawberries on sale for £1.99 a punnet, marked down to half price from £3.99 a punnet. She asked Tesco staff when strawberries had ever been on sale at the higher price, but they failed to respond.

The complaint led to Birmingham City Council bringing a case against Tesco under the Consumer Protection from Unfair Trading Regulations 2008, in which it was argued that Tesco had misled customers by presenting the promotion in a way that was likely to deceive consumers into thinking that the discount was greater than it actually was. The court heard that Tesco had sold the strawberries for £3.99 for one week, then £2.99 for a further week, before selling them “half price” at £1.99 for 14 weeks. It was alleged that Tesco had artificially inflated the price of the strawberries to £3.99 (which was far higher than it should have been, given that strawberries were in season at the time) in order to benefit from consumers wanting to take advantage of the perceived discount for the rest of the summer by purchasing at £1.99 a punnet, which was actually the “real” price. Tesco was estimated to have made £2.3 million in additional profit as a result of the promotion.

Tesco eventually pleaded guilty to four offences of engaging in unfair commercial practices contrary to the Regulations. Judge Michael Chambers commented that Tesco had acted in breach of the “high degree of trust” that consumers have in major retail chains. According to pricing guidance issued by the Department for Business, Innovation and Skills, the period during which a product is heavily discounted should not exceed the period during which it was sold at full price. An exception may be made in circumstances where a retailer finds itself with an excess of stock, but that was clearly not the case in this instance, as Tesco would not have needed 14 weeks to adjust its stock levels for fresh produce. The length of the promotion was therefore excessive and disproportionate.

This is good news for consumers, as it has sent a clear message to retailers that artificially inflating the price of products so that a “discount” can be applied at a later date is misleading and unfair. However, in practice it will have a greater impact on retailers of perishable produce, who need to be able to clear their stock whilst it is still fresh. Retailers of other products such as clothing and electronics, or even non-perishable food items, are able to sell items at the higher price for a longer period of time in order to “discount” them at a later date. As long as the period of the discount does not exceed the period at which the product was sold at full price, this will not fall foul of the regulations.

Key contact

Helen Scott-Lawler

Helen Scott-Lawler Partner

  • Head of Food and Drink
  • Commercial
  • Intellectual Property and Media

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