Comments
The Guidelines represent a welcome clarification of suppliers' obligations to accurately and prominently communicate advertised prices and accompanying conditions, thus placing consumers in a position to make informed choices.
While not legally binding, suppliers may do well to familarise themselves with, and adhere to the recommendations set out in the Guidelines as it indicates the manner in which the CCCS may interpret the CPFTA, and the factors they may consider when assessing whether displayed/advertised prices and pricing practices constitute unfair practices. Since taking on the additional function of administering the CPFTA on 1 April 2018, the CCCS has completed four CPFTA-related investigations, three of which had elements of suppliers engaging in unfair trade practices related to price transparency. The issuance of the Guidelines and these investigations underline the CCCS's focus on price transparency.
The CCCS is also reviewing the CPFTA to enhance its enforcement powers. Currently, the CCCS is only empowered to apply for an injunction against a supplier who has engaged, is engaging, or is likely to engage in an unfair practice. The CCCS announced that it is looking into the possibility of meting out fines for breaches of the CPFTA, without having to go through the courts.
As the CCCS focuses on price transparency, businesses should review their pricing practices before the Guidelines come into effect to ensure that they do not fall foul of the CPFTA. Please do not hesitate to get in touch with us if you wish to discuss how this development may affect your business operations in Singapore.
In more detail
The Guidelines will come into effect from 1 November 2020. Importantly, the CCCS highlighted that the CPFTA and the Guidelines apply to both local and overseas-based businesses that supply goods and services to consumers in Singapore. The Guidelines cover four areas of concern and make recommendations on suppliers' pricing practices.
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Area of concern
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Recommended pricing practices
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Drip Pricing which is the practice of advertising a product or service at a lower headline price (i.e., displayed/advertised) than the final price that a consumer would pay
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Ensure that any unavoidable or mandatory charges are included in the total headline price. If such charges cannot be reasonably calculated, they should be disclosed in a clear and prominent manner together with the headline price.
Adopt an "opt-in" approach for add-ons. If pre-ticked boxes are used for optional add-ons, suppliers must make the boxes prominent, disclose the price of such items, along with any material terms and conditions, and include them in the headline price.
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False or misleading price comparisons to represent a price advantage over other suppliers
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Price comparisons made with other suppliers' prices should be buttressed by regular research, and be made between goods and services that have been accepted as being similar or equivalent to each other by consumers or trade norms.
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Advertising a false discount to represent a price benefit
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Reference to a previous price should be a recorded, bona fide price. Additionally, the duration of discounts should be clearly and prominently indicated.
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Misusing the term "free" in advertisements when terms and conditions are attached.
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The term "free" should be accompanied by clear and prominent disclosures of any incidental costs, qualifiers, key terms and conditions, and any applicable cancellation processes (in the case of free trials).
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The focus on these four areas in the Guidelines is unsurprising given that the CCCS had previously identified them as raising consumer protection concerns in the proposed version of the Guidelines. We have discussed the CCCS's proposed version of the Guidelines and the market study preceding it in our October 2019 newsletter here. The CCCS finalised the Guidelines after considering 26 responses received during its public consultation exercise.
Since taking on the additional function of administering the CPFTA on 1 April 2018, the CCCS has completed four CPFTA-related investigations, three of which had elements of suppliers engaging in unfair trade practices related to price transparency:
- In the Charcoal Thai 1 Restaurant case, the CCCS noted that the restaurant represented in its online promotional materials, and in-store posters and menu that discounts for meals that were "for a limited period only" or would be "Ending Soon! 50% Discount" when in fact they continued to be available for at least another two years since February 2016.
- In the Wishing Well Beauty Centre and Ruby Beauty Pte Ltd case, both parlors charged prices for goods or beauty services that were substantially higher than estimates provided to consumers.
- In the SG Vehicles group of companies case, consumers were required to make additional payments due to changes in circumstances beyond their control.
The issuance of the Guidelines and these investigations underline the CCCS's focus on price transparency.
Lastly, we understand that the CCCS is reviewing the CPFTA, and one of the key areas under review relates to the CCCS's enforcement powers. During the CCCS's launch event in 2018, the CCCS's chairman highlighted that the "new remit will ensure the CCCS's powers under the CPFTA work hand in glove with its powers under the Competition Act." While the CCCS has the powers to impose financial penalties for infringements under the Competition Act, the CCCS does not have such powers under the CPFTA. Currently, the CCCS can only investigate errant businesses and file an injunction application with the state courts against them.
For more information, please refer to the Guidelines (see here), Guidelines Infographic (see here) and the corresponding media release (see here).
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