CMA applies proportionality test to avoid £217m civil sanction
Last month we covered the first CMA penalty under the DMCCA which saw the AA receiving a £4.2 million penalty for drip pricing. Last week the CMA released a slightly redacted version of the final infringement notice for the penalty. We now know that the CMA considered the drip pricing – which related to only including the booking fee at the end of the transaction journey – was a moderate harm but high culpability. This resulted in a penalty starting at 15% of the UK Turnover, as that was £1.45 billion, a starting point of £217 million. After a small reduction for cooperation the CMA reached a penalty of £206 million. Given that the actual financial harm totals £800,000 and continued for under a year, the CMA took a detailed look at proportionality and considered that a fine of that level was not proportionate. As a result, it chose to reduce the penalty by 97% to £7 million which was further reduced for an early resolution to £4.2 million.
While clearly positive that the CMA are approaching proportionality in this way, the scale of the penalty risked is even more eye watering than initially thought. Business should be checking their pricing and claims verification systems to minimise risk or get in touch to discuss how we can help.
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Advertising watchdog rulings: The Advertising Standards Authority has published cases upheld following complaints as follows:
Bestway Retail t/a Bargain booze – for implying in advertising for valentines day that alcohol could help deal with loneliness. ‘Why have romance when you can have rum’.
Website for GuLP-1, a food supplement company where numerous claims were made for a product about weight loss including “supporting healthy, sustainable weight loss without injections". "Natural Weight Loss & Blood Sugar Support", "Stop Your Cravings", and "Natural Alternative to Trending Weight Loss Products”. "Engineered for optimum weight loss by naturally increasing GLP-1 levels”, and "Weight: Unlock results with reduced cravings", "Energy: Prevent slumps and crashes", "Digestive: Increase GLP-1 naturally". The ASA ruled that claims to prevent, treat or cure a human disease were prohibited for foods, including food supplements and that medicinal claims may only be made for medicinal products authorised by the MHRA (Medicines and Healthcare products Regulatory Agency). Health claims for products could not be made unless they were specifically included in the UK National Health Claims register. View > View >
