By: Helen Trusler, Tom Middleton, Yinyin Cai, April Chiu
22 Aug 202510 min read
As pricing strategies become more personalised, responsive, and data-driven, regulators are turning their attention to how prices are communicated to consumers – especially in digital markets. Concerns about fairness, transparency, and consumer understanding are prompting closer scrutiny of practices such as dynamic pricing and drip pricing.
In its ongoing consumer protection work, the Competition and Markets Authority (CMA) has recently issued two key updates in relation to firms’ pricing practices.
On 20 June 2025, it published a review of dynamic pricing, highlighting both its benefits and potential risks to consumers. This pricing strategy gained considerable public attention for its perceived so-called use in the Oasis reunion tour ticket controversy (although the CMA has identified in it's separate investigation that it hasn't found evidence to suggest it was in fact used).
On 3 July 2025, the CMA launched a consultation on new price transparency guidance under the Act, focusing on how total prices, optional fees, and time-limited offers should be presented.
These changes mark important developments in the UK’s new consumer protection regime.
The CMA’s dynamic pricing project was launched in November 2024 to better understand how and when dynamic pricing is used across different sectors of the economy. In June 2025, the CMA published an update on its project findings.
Dynamic pricing is defined as the rapid and frequent adjustment of prices in response to changing demand conditions. Dynamic pricing is not inherently problematic, and its effectiveness largely depends on how it is applied, it has the potential to enhance allocative efficiency. However, it also raises important questions about fairness and poses risks of misuse in specific contexts.
The CMA’s review aimed to assess how dynamic pricing affects consumer outcomes, market competition, and trust – and to determine the circumstances under which such practice aligns with or risks breaching consumer protection law. It focused on sectors such as travel, live events, hotels, and online retail, where pricing practices have grown increasingly complex due to AI and other digital tools that use algorithms and automation.
The CMA acknowledges potential economic benefits: dynamic pricing can help firms balance demand, optimise capacity, and improve efficiency. Consumers who understand how prices vary and are flexible may access better deals. But it also highlights circumstances in which dynamic pricing may lead to poorer outcomes, particularly where consumers are unaware of its use or how it affects pricing. These concerns include:
Consumer outcomes vary depending on how pricing is implemented, disclosed, and understood – especially whether consumers know how prices are determined and when they can expect changes.
What underlies many of these concerns is the view that dynamic pricing can, intentionally or otherwise, exploit consumers’ behavioural biases. For instance, using time-limited offers to trigger fear of missing out (taking advantage of the ‘loss aversion’ bias) or framing prices to make them appear better than they are (the ‘anchoring’ bias). We talk more behavioural biases in more detail in The DMCC: How will it change behaviour?
The new Digital Markets, Competition and Consumers Act (the DMCC) requires firms to provide all material information needed for consumers to make informed purchasing decisions. Under the DMCC, businesses face fines of up to 10% of global turnover for breaches – a new provision that places consumer law on par with competition law enforcement.
Key tips for firms:
Failure to provide such transparency may be deemed misleading. The CMA has also warned it will act against egregious conduct, such as providing objectively false pricing information or using aggressive sales practices, particularly those affecting vulnerable consumers.
The CMA highlights that its recently enhanced enforcement powers under the DMCC Act enable it to identify harmful or misleading pricing practices and impose fines where infringements occur. Furthermore, it also emphasises that sector-specific interventions may be the most proportionate and effective response, depending on the context. It signals that it will continue monitoring developments across markets to assess whether further legal or regulatory changes may be needed in future.
For firms, this points to a period of increased regulatory attention, especially in digital markets where pricing models are more complex. Firms should review how their dynamic pricing systems are designed and disclosed, ensuring that communications about the pricing approach used (including if prices can change) are transparent, clear, and easy for consumers to understand. Particular care should be taken to consider how vulnerable consumers might be affected, and what extra information may be useful to provide.
In the backdrop of the dynamic pricing project, the CMA has been refining its guidance for firms under the DMCC. On 3 July 2025, the CMA published its draft pricing transparency guidance for consultation. This intends to help businesses comply specifically with price transparency requirements, including for instance the updated rules on ‘drip pricing’ – a practice where additional fees are revealed only later in the purchasing process.
The draft guidance clarifies what constitutes an invitation to purchase and what pricing information must be included in such communications. It follows on from the CMA’s publication of guidance on new unfair commercial practices in April 2025, which covers the broader scope of prohibited practices under the DMCC, including all the information that must be provided when making invitations to purchase.
The draft guidance comes in response to substantial stakeholder feedback received by the CMA in relation to drip pricing, in which businesses sought further guidance on the complexity involved in presenting the ‘total price’ in different scenarios. Some of these scenarios included where there are mandatory versus optional fees, collection as a viable alternative to delivery charges, or tourist taxes which differ across regions and UK nations.
For example, if a supermarket advertises milk at £1 but delivery incurs a mandatory fee that varies with delivery distance of loyalty membership, it is ambiguous whether the headline price must already include delivery. The draft guidance acknowledges this complexity: where mandatory delivery costs can't be calculated in advance, businesses may offer an indicative price with a 'running total' throughout the customer journey to ensure customers can calculate the full cost themselves.
The guidance may be particularly relevant for firms that use indicative, bundled, or multi-component pricing strategies, where the total price is not necessarily obvious at the outset.
Most marketing materials that include both product characteristics and a price – such as, website listings, QR code menus, digital ads, app banners – will be considered an invitation to purchase, even if a transaction can't be completed at this point.
Firms must display the total price, including all mandatory fees, taxes, charges or other payments a consumer would necessarily incur. Examples include booking fees, platform charges, delivery or pick-up costs, and admin fees.
Mandatory charges mustn't be introduced later in the consumer journey (drip pricing) and shouldn't be presented in fragments without a clearly displayed total (partitioned pricing). For example, a customer sees a flight advertised for £50. At checkout, additional mandatory fees are added – £20 for baggage, £15 for seat selection, and £10 for booking – bring the total to £95. This is partitioned pricing, as the full cost was revealed in parts.
The guidance outlines expectations for pricing structures involving per-transaction fees, delivery costs, local taxes, and periodic contracts. For example, where delivery is required, the lowest available delivery cost should be included in the headline price.
The CMA's recent updates demonstrate an increasing regulatory emphasis on pricing practices, especially in dynamic and drip pricing, which are facing greater scrutiny under the DMCC. In particular, the CMA is expected to focus on high-impact sectors, such as travel, ticketing, hospitality, and online marketplaces. Firms can expect more thorough oversight regarding transparency and fairness.
Firms are encouraged to review how they present pricing across advertisements, platforms, and point-of-sale channels through the lens of transparency, fairness and compliance – and to ensure consumers’ behavioural biases aren’t taken advantage of. This includes considering whether pricing is “realistic, meaningful and attainable” as well as evaluating whether any commonly incurred “optional” charges might need to be reflected in the headline prices.
Firms who use dynamic pricing systems should review these carefully, with a view to ensuring clarity around how and when prices vary, redesigning displays with total prices visible upfront, and strengthening internal governance. In particular, for those operating online or across multiple jurisdictions, it may be beneficial to reassess how VAT, local taxes, and third-party charges are included in the displayed prices.
Failure to comply could lead to enforcement action, reputational risk, or disruption to pricing strategies.
The direct consumer enforcement guidance was published in April 2025, alongside the CMA’s approach document outlining its enforcement priorities for the first 12 months under the DMCC regime. The CMA is currently inviting firms to engage with its consultation on the draft price transparency guidance, which is open until 8 September 2025.
Input from stakeholders – including businesses, enforcement authorities, and consumer representative bodies – will help shape a compliance framework that is both practical and clear.
For more insight and guidance, contact Tom Middleton or Helen Trusler.
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