The Competition and Markets Authority (CMA) has warned “when we say we’ll act, we act” in enforcing new pricing rules on retailers.
The rules require travel sellers to include local taxes paid in destination in the ‘total price’ of a holiday before taking a booking, including in adverts.
Abta has warned of “potentially extremely serious consequences” if companies don’t take “appropriate steps” to include “unavoidable fees and charges payable at hotels, ports or airports”.
More: Comment: What do the CMA’s pricing guidelines mean in practice
CMA guidance on the requirements, issued in November, came with a warning that the regulator would allow three months for compliance – a period which has now expired. But Association of Atol Companies legal advisor Alan Bowen said: “I fear there is a long way to go [for many businesses to comply]. The CMA will probably take action.”
Emma Cochrane, CMA acting executive director, spelled out what the sector can expect in a speech this month, noting: “For the first time, the CMA can decide whether consumer protection laws have been infringed and issue penalties where we find a breach.”
She recalled the CMA sent “100 advisory letters” to businesses including in travel at the time it issued the guidance urging they “review their practices or risk future action” and said: “Make no mistake, you can expect further action.”
The CMA issued its first fine since gaining new powers under the Digital Markets, Competition and Consumers Act this month, issuing a £473,000 penalty against car park management firm Euro Car Parks for failing to comply with a notice to provide information while the CMA considered opening an investigation.
Cochrane also noted the CMA issued guidance last April on compliance with a ban on ‘fake’ reviews for which it allowed a similar three-month adjustment period, which it followed by conducting “a sweep of over 100 businesses to check their compliance” and found “more than half needed to do more”.
She said the CMA then sent advisory letters to these businesses rather than move immediately to enforcement, but she insisted: “Enforcement will follow.”
The complexity of complying is clear from the lists of taxes in resort compiled by major operators.
Tui lists 48 countries and Jet2holidays 46, with amounts varying between cities and regions, length of stay, type of accommodation, payable per person or per room, per night or per stay, and with or without reductions for children.
• Meanwhile, TV presenter Alexander Armstrong has partnered with the CMA on a new online campaign to help businesses make their pricing clearer – and avoid legal pitfalls.
The national Clear Pricing campaign highlights the CMA’s new ‘3 Step Pricing Check’ which businesses can use to ensure their pricing practices are within the law.
The authority said in a statement: “It’s illegal to hide additional mandatory fees (such as a booking fee or delivery fee), taxes or other charges until late in the purchase process – a practice known as drip pricing.”
Its three steps are: Show the total price up front; Include all mandatory charges; If you can’t give a total yet, is it clear how customers can work it out?
Cochrane said: “We want businesses to stay on the right side of the law and compete on the strength of their products, not on hidden fees or confusing charges.”
