CMA investigates Simba Sleep for misleading advertising practices

The question

Is Simba sleepwalking into possible enforcement action by the CMA for misleading advertising practices?

The key takeaway

The Competition and Markets Authority (CMA) is taking a hands-on approach to tackle two types of commercial practices that breach the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Urgency claims and misleading price comparisons have been publicly at the top of the CMA’s agenda since early 2023. Simba has been dealt a double blow with an upheld ruling from the ASA on 6 March 2024 coming hot on the heels of the CMA opening a formal investigation into Simba’s practices on 15 December 2023.

The background

Simba Sleep has, yet again, come under the scrutiny of the CMA due to allegedly misleading marketing practices. The CMA’s investigation follows a previous ASA ruling against Simba in September 2022 which misleadingly presented an inflated pre-discounted price as the typical selling price.
These investigations come under the wider context of the CMA’s crackdown on misleading advertising. The CMA has conducted similar investigations into Wowcher and Emma Sleep (see previous coverage on this in our Summer 2023 Snapshots.)

The development

The key focuses of the CMA’s investigation will be Simba’s alleged use of urgency claims that pressurise consumers into making snap purchasing decisions (eg countdown clocks showing the time left for a particular promotion) and misleading price comparisons (eg the use of “was/now” prices to suggest a higher “everyday” price that the product is usually sold at, so the consumer believes they are securing a bigger discount/the best deal).

Both advertising tactics are targets of the CMA’s “Online Choice Architecture” awareness campaign into misleading advertising. In its open letter in March 2023, the CMA flagged that these types of claims negatively impact consumer choice. Given the CMA’s protective role, and particularly in light of the cost-of-living crisis leading many consumers to shop around for the best deals, ads which contain misleading price reductions claims and urgency messaging will face greater scrutiny.

The next phase of the CMA’s investigation will involve a detailed assessment of Simba Sleep’s practices to determine if these are a breach of the CPRs. If the CMA’s concerns are substantiated, which feels likely in light of the recent upheld ASA ruling against Simba specifically relating to misleading and unsubstantiated price comparisons, the CMA will almost certainly require Simba to change its practices (as it did with Emma Sleep, who the CMA also completed an investigation into relating to misleading price comparisons in July 2023).

Why is this important?

The CMA currently lacks direct powers to enforce consumer protection law and needs to take  court proceedings to establish breaches. Therefore, enforcement action at this stage is likely to be in the form of the CMA accepting undertakings from Simba that they will improve their practices. However, businesses should bear in mind that these limitations on the CMA will be falling away soon, with the upcoming Digital Markets, Competition and Consumers Bill granting the CMA the ability to impose fines directly when it receives royal assent and comes into force.

Any practical tips?

Any time limits/closing dates for promotions should be accurate and not designed to pressure consumers into making immediate purchasing decisions. In particular, where a countdown clock is used, it should not immediately reset when the countdown reaches zero – at the point the usual selling price should be reinstated.

Where prior prices are used to indicate current pricing promotions, those reference prices must represent a genuine prior selling price of the business for the relevant product(s) and such prices need to have been used for a reasonable period prior to the promotion, with records kept to evidence this.

Spring 2024