Competition and Markets Authority v Emma Matratzen GmbH & Ors

The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the CAP Code) precludes the use of marketing materials that materially mislead. The ASA has power to intervene in cases involving misleading advertising.

On 22 June 2023, an edition of CAP News was published entitled “Make sure the price is right: using reference pricing in ads”. No-one suggests that this document has the force of law and the CMA does not suggest that it even has the status of evidence showing that Emma’s use of Reference Prices was misleading. Rather, the CMA advances this as evidence of what others in the industry were thinking at the time about Reference Prices in order to support its argument that it is taking a fair and reasonable position on the FVR in this case.

The edition of CAP News referred to research that the ASA had commissioned that it considered established that “consumers have limited understanding of pricing practices in general, and reference pricing in particular, and have an expectation that reference prices are regulated and can therefore be trusted”. The document suggested that there were five key points to consider when using a Reference Price in advertising:

The CTSI periodically publishes a document entitled Guidance for traders on pricing practices. This is intended to be non-binding guidance on obligations under the Regulations. At times material to this dispute, the most recent guidance was that published in 2018 (the 2018 CTSI Guidance). This document was updated in 2025 and its provisions dealing with Reference Prices were materially similar to those in the 2018 Guidance.

The 2018 CTSI Guidance emphasised that using a reference price can create a point which consumers use as a base for estimating the value of a product. It might reduce the effort consumers put into shopping around. Therefore, the guidance stressed that “reference pricing calls for a high level of trust and integrity” particularly since consumers will be unlikely to have made a record of any reference prices used in order to determine for themselves whether the claimed price reduction is genuine.

The guidance stated that the central question when asking if use of a Reference Price is acceptable is “… whether the average consumer would think that it is a fair comparison”. The guidance went on to give a “non-exhaustive” list of issues that should be considered when determining whether a price reduction is genuine. Those largely overlapped with the matters considered in the CAP News extract described above. However, some additional detail was given on some issues.

The 2018 CTSI Guidance, like CAP News, considered that the level of sales actually made at the Reference Price was a relevant consideration, framing one of the issues to be considered as:

5.

Were significant sales made at the higher price prior to the price comparison being made or was there any reasonable expectation that consumers would purchase the product at the higher price?

Thus the 2018 CTSI Guidance approached this issue in two stages. The presence of “significant sales” at the higher price might, of itself, support the proposition that the higher price was genuine. However, even if significant sales were not made at the higher Reference Price, the Reference Price might still be genuine if the trader could point to a reasonable expectation that consumers would purchase the product at that higher price. That two-stage approach is also brought out in a table on page 16 of the 2018 CTSI Guidance.

On 1 August 2024 the CMA published a guidance paper entitled Discount and reference pricing principles: selling mattresses online. That document stated that, in the online mattress sector, the question of whether a price comparison is genuine will depend on whether the 1:2 FVR set out in paragraph ‎4 above is satisfied. Emma is critical of this document, characterising it as an attempt by the CMA to impose, through guidance, the very FVR that Emma considers to be wrong and unprincipled. The CMA’s position is that the guidance was seeking to achieve a level playing field: having reached a settlement with another online mattress supplier, Simba, which included a 1:2 FVR, the CMA wished to encourage all businesses in the sector to adhere to the same rules to avoid distortions that might arise if some businesses were complying with a FVR and others were not.

I do not need to decide whether or not it was appropriate for the CMA to publish this guidance during the currency of its dispute with Emma. However, given the basis on which the CMA is advancing evidence of guidance given to businesses in the sector (see paragraph ‎44 above, it is clear to me that I should not take the CMA’s own publication as evidence of the reasonableness of the CMA’s position on the FVR and therefore I say nothing more about this guidance.

In a ruling dated 16 March 2022, the ASA found that two examples of Emma’s use of a Reference Price on its website were misleading.

The first example concerned an advertisement on the website on 27 September 2021 offering a particular mattress for sale for £637.45. Text above that selling price stated “45% savings” and “From £1,159.00”.

That particular product launched in March 2021. The ASA considered data covering 7 months from the date of launch to the expiry of the promotional offer. The ASA noted that throughout the 224-day period for which it had data, the mattress had been priced at the reference price for all customers on just 68 of those days. Over that period, only 17% of units had been sold at the reference price. The ASA noted that the item had been on promotion (to all customers, both new and existing) since the reference price was increased to £1,159.

Overall, the ASA concluded:

Because the product had not been priced at the reference price for significantly longer than it had been on promotion, and only 17% of units had been sold at the reference price, we considered that Emma had not demonstrated that their reference prices were the usual selling prices of the product.

Thus the breach that the ASA identified arose as the result of the combination of two factors: (i) the product had not been offered for sale for long enough at the Reference Price and (ii) only 17% of units had been sold at the Reference Price.

The second example concerned a different product page on Emma’s website. On 12 November 2021 that advertised a different mattress at £1,039.35. Text above that selling price stated “39% savings” and “From £1,728.00”. Emma intended that as an introductory offer. However, that was not made clear on the product page or the previous pages through which a customer would have had to click through to land on the product page.

Therefore, in this case, the breach arose because Emma had not explained to consumers that the mattress was a new product that had never been offered for sale at £1,728. In those circumstances, the ASA found that customers would believe that £1,728 was the “usual selling price of the mattress” at the time of the advert, rather than as a price that would or might be charged in the future.

The CMA opened its investigations into Emma on 28 November 2022. In the course of that investigation, it has collected sales data from Emma covering three distinct periods. The First Analysis Period ran from 1 November 2021 to 30 November 2022, some 13 months ending more or less on the date the CMA’s investigations started. The Second Analysis Period ran from 1 December 2022 to 31 August 2023 and thus straddles the date of the ASA ruling on Emma’s use of Reference Prices. The Consultation Period was a statutory consultation period that ran from 1 September 2023 to 29 February 2024.

The figures in the table below are agreed between Emma and the CMA to be broadly correct. They show the average period of time over the three analysis periods for which four leading lines of Emma’s mattresses were offered for sale at a Reference Price that was referred to in a promotional offer.

In a sense, the figures set out in the table above are of historic interest. Soon after the CMA started its investigation, Emma accepted it had to offer products for sale at Reference Prices for a sufficiently long period for it to be fair to advertise that product as being discounted by comparison with that Reference Price. That acceptance is reflected in the marked difference in the average percentage time for which Emma Original and Emma Premium mattresses were offered for sale at Reference Prices in the First Analysis Period as compared with later analysis periods. However, the CMA say that the data remains instructive for the reasons set out in paragraph ‎64 below.

The figures set out in the table below are also agreed to be broadly correct. They show, for the same four product lines, the percentage of the volume of sales in each of the analysis periods that were made at a Reference Price, as distinct from a discounted price, with the shaded cells representing areas in which Emma now accepts it has breached the Regulations:

I agree with the CMA that a comparison between the figures in the two tables suggests that, even where a particular mattress has been offered for sale at a high Reference Price for a similar period of time as it is offered at a discounted price, Emma has made many more sales at the discounted price. That effect can be seen in the following table:

In his witness statement, Mr Schmoltzi emphasised that the purchase of a mattress is a high-value, but infrequent and generally non-urgent purchase. That means that customers can “wait for a good deal” which drives both Emma and its competitors to “offer substantial discounts for part of their offering at all times”. Having made those points, in paragraphs 18 and 19 of his witness statement, Mr Schmoltzi said:

18.

To my understanding of the industry, this culture of high headline discounts has educated consumers over years and decades, with the result that consumers expect that mattresses should be bought at a significant discount and will defer their purchase until a suitable promotion is available. This effect is even more important in my experience with lower priced market segments, where consumers are more price sensitive compared to more premium segments. This can also be seen in the discounts of Dreams and Bensons for Beds, where the rather cheaper private label products have higher discounts compared to more expensive brands.

19.

Customers today expect discounts as part of the purchasing process, especially in an industry where price and promotional strategies play a substantial role in consumer choice.

Mr Schmoltzi made his witness statement on 19 November 2024. Some support for Mr Schmoltzi’s evidence quoted in paragraph ‎65 comes from the fact that, in the First Analysis Period, 98.2% of Emma’s sales came from the sale of products that were advertised at a discount using a Reference Price.

The CMA takes issue with Mr Schmoltzi’s analysis. It points to a document generated by Emma (the March 2025 Paper) that analyses the effect of new UK pricing and promotional practices that Emma introduced on 14 January 2025 as a consequence of the CMA investigation. That document showed that, across all mattresses, in 2024 Emma sold 7 discounted mattresses for every 1 mattress sold at an undiscounted price. However, between January and March 2025, the ratio switched and in those three months Emma sold 1 discounted mattress for every 2 mattresses sold at an undiscounted price. Put another way, in 2025, after introducing changes in response to the CMA’s investigation, the proportion of full-priced mattresses sold in the first three months of 2025 was 14 times the same proportion calculated for the 12 months in 2024.

Those figures represent totals across all mattresses. No figures are available by reference to individual product lines.

Emma’s paper did, however, suggest that its changed approach had come at a cost both to Emma and consumers. It suggested that (i) Emma’s changed approach meant that UK customers now face on average higher prices when purchasing Emma’s products and (ii) because Emma’s competitors were not also adopting Emma’s approach, there was a reduction in traffic on Emma’s website which had caused its market share, and its growth, to decline. That led to a significant reduction in Emma’s conversion rate (the proportion of customers who, having visited the website, make a purchase). Emma also estimated that its net revenue in the first quarter of 2025 fell by 40% to 60%.

The March 2025 Paper also suggested that it would simply not be commercially feasible to maintain the 1:2 ratio for each particular product line it sold.

Both sides sought to extract some quite significant conclusions from these materials, none of which had been the subject of cross-examination given the constraints of the Part 8 procedure:

Both of those arguments rest on quite complicated factual assertions. The CMA’s argument in paragraph ‎71.i) asserts a causative link between sales practices and customer behaviour. I do not see how that could straightforwardly be established without quite detailed evidence as to the market, participators in it, and their actions. A similar lack of data on the sales practices and figures of Emma’s competitors means I cannot make the finding requested in paragraph ‎71.ii).

In the light of Mr Schmoltzi’s unchallenged witness evidence and the additional evidence in the form of the March 2025 Paper, I reach the following conclusions:

Since the CMA opened its investigation in November 2022, Emma has co-operated and has responded constructively to the CMA’s concerns.

I accept Mr Schmoltzi’s unchallenged evidence that, in response to the CMA’s concerns, Emma has taken the following steps:

The quality and extent of Emma’s co-operation with the CMA, and its addressing of the CMA’s concerns, can be seen from the fact that, on 22 May 2026, Emma and the CMA entered into a Consent Order dealing with the CMA’s issues on Emma’s use of urgency messaging. Pursuant to that Consent Order, Emma acknowledged that aspects of its previous conduct on urgency messaging involved Schedule 13 infringements. Emma undertook not to repeat that conduct.

Moreover, Emma has gone further than the position set out in paragraph ‎75.i) in relation to the length of time for which a product must be offered at the Reference Price. It accepts that use of a Reference Price is misleading if the product in question has not been offered for sale at the Reference Price for at least as long as it is being offered for sale at the discounted price.

Indeed the quality and extent of Emma’s co-operation with the CMA, and its alteration of its business practices in the light of the CMA’s concerns, can be seen from the fact that the only aspect of the CMA’s concerns that is does not accept relates to the FVR.

The whole flavour of the CMA’s case is that Emma has already breached the Regulations so that I have power, by s217(1) of EA 2002 to make an enforcement order. I also understand the CMA to argue that, given those historic infringements, unless an enforcement order is made, Emma will continue to infringe, a situation falling within s217(2) of EA 2002. Both of those arguments are based firmly on the proposition that Emma has, in the past committed Schedule 13 infringements.

I recognise that the court has power, by s217(2) of EA 2002, to make an enforcement order even if a trader has not actually committed any previous Schedule 13 infringements. However, I do not consider this to be a live consideration in this case. The need or otherwise for an enforcement order in this case must be rooted in Emma’s conduct to date. If conduct to date is not enough to justify the making of an enforcement order, apprehensions as to future conduct will not alter that position.

In its pleadings in this case, Emma has admitted that certain specific and limited forms of its use of Reference Prices breached the Regulations:

Emma admitted during trial, by reference to the table set out in paragraph ‎63 above, that its sales of mattresses in the shaded cells were insufficient to substantiate an assertion that Emma’s customers were willing in sufficient quantities to purchase those mattresses at the undiscounted Reference Price.

In a consent order of 22 May 2026, Emma admitted that its conduct on Urgency Messaging breached the Regulations and it gave undertakings as to its future conduct in that regard.

In his oral submissions, Mr Williams KC suggested that Emma had failed to engage with the CMA’s case on infringement. He described that failure as “remarkable”. I do not, however, accept that criticism of Emma’s approach.

It is, of course, possible to rationalise this case as involving two issues: the first being whether Emma had committed Schedule 13 infringements and the second being what, if any, enforcement order should be made in the light of any such infringements as were established. The CMA itself approached the issue in that way. It characterises the Schedule 13 infringements as being a misleading use of Reference Prices that deceives consumers into thinking that they are getting a good deal when, in fact, they are paying the same price as most other consumers. If it can establish Schedule 13 infringements of that kind, the CMA seeks an enforcement order that requires Emma to adhere to a 1:2 FVR subject to safety valves and qualifications.

It is true that a good part of Emma’s written skeleton argument was devoted to explaining why, in its submission, no enforcement order should be made. However, that did not mean it was failing to engage with the CMA’s case on breach. Section 217(5) requires any enforcement order to specify the nature of the conduct which has constituted the infringement. The enforcement order must then direct the person bound by it not to continue or repeat that conduct. Emma’s central argument was that a failure to meet the FVR was not, on its own, conduct that involved a Schedule 13 infringement. Therefore, the court should not make an enforcement order that directed Emma to meet the FVR whether with, or without, safety valves. In my judgment, it was appropriate for Emma to make its case in that way.

It is, therefore, relevant, though not determinative, to consider whether an average consumer would feel misled or deceived if it knew that Emma was not adhering to an FVR of around 1:2. After all, the touchstone of whether an action is a “misleading action” is the perspective of the average consumer (see paragraph ‎9 above). In performing that evaluation, I will not be unduly constrained by the CMA’s suggestion that the applicable FVR should be in the ratio of 1:2. As the table in paragraph ‎63 shows, apart from in relation to the Emma Hybrid mattress in the First Consultation Period (in relation to which Emma came close to meeting a 1:3 FVR which is equivalent to selling 25% of goods at a Reference Price), Emma has been a long way from meeting a 1:2 FVR. I will, therefore, consider the possibility that, even if an average consumer would not feel misled or deceived if Emma failed to meet a 1:2 FVR, that consumer would feel misled by failure to meet an FVR of a similar level. However, this approach must have its limits. The CMA has chosen to come to court with a request for an enforcement order based on a 1:2 FVR. Given that request, Emma’s evidence has dealt with an FVR of at, or around, that level. There would, therefore, be difficulties with a conclusion that, an average consumer would feel misled by a failure to meet a materially different FVR since neither party has directed its evidence or submissions at that level of FVR.

However, I agree with the CMA that an average consumer’s perspective of a 1:2 FVR, or even a 1:3 or 1:4 FVR cannot be determinative if those ratios are viewed purely in isolation. I also need to address the CMA’s case that, whatever level of FVR is appropriate for an enforcement order, Emma’s actions involving Reference Prices are misleading or deceptive including in areas in which Emma admits no breach. In order to establish those other breaches, the CMA relies on the following central propositions which are not tied to a specific level of FVR:

I do not understand the proposition set out in paragraph ‎88.i) to be controversial.

The proposition in paragraph ‎88.ii) is controversial:

The propositions in paragraphs ‎88.iii) to ‎88.iv) are controversial. However, they are controversial because of the difference between the parties that I have explained in paragraph ‎90.

Therefore, the parties are agreed that if a Reference Price is not a “usual price” or a “genuine price” in the requisite sense, it will be misleading to suggest to an average consumer that a discount is being offered by comparison with that Reference Price. Where the parties disagree is as to what an average consumer would perceive a genuine or usual Reference Price to be. The CMA’s position is that a price paid by a relatively small proportion of consumers is incapable of being a genuine or usual Reference Price. Emma’s position is that this proposition, modest as it may seem, is not borne out as other factors are relevant.

In my judgment, it is significant that an average consumer visiting Emma’s website has a choice to make. On seeing Emma’s selection of mattresses, even if they thought the quality and specification of a particular mattress met their needs, they could simply decide to defer buying a mattress altogether. Accordingly, a Reference Price acts as an inducement to an average consumer not to defer purchasing a mattress, but rather to take some action because of a perception that a good deal is on offer. I agree with both parties that an average consumer would not consider a good deal to be on offer if the Reference Price was not a realistic selling price for the mattress in question.

An average consumer’s decision on whether to defer taking some action on their own purchasing decision is not directly affected by the price that other consumers have paid in connection with their own purchasing decisions. The average consumer is reasonably well informed, reasonably observant and circumspect. Provided that a Reference Price is realistic, the average consumer will realise that some purchasers will have their own reasons for purchasing at a full Reference Price without waiting for a discount. The fact that other consumers act in that way will not of itself affect the average consumer’s perception of whether he or she is being offered a good deal or not.

I accept that an average consumer’s perceptions as to how many sales are being made at the Reference Price will have a clear effect on their perceptions of the deal being offered to them. To give some extreme examples, if an average consumer was told that, to date, all sales of a particular mattress have taken place at a Reference Price, that consumer might well feel that the discounted price represents a very good deal and so be more inclined to act rather than defer the purchase of a new mattress. Conversely, an average consumer told that no sales whatsoever had taken place at the Reference Price would be likely to question whether that Reference Price truly is a realistic price.

However, an average consumer visiting Emma’s website is not entering a competition to “beat” other consumers by paying a lower price for a mattress than 50%, 33% or even 25% of other purchasers of that mattress. He or she would not, therefore, consider that the question whether a price is realistic can be determined solely by reference to a fixed 1:2 FVR, or even an FVR in that approximate range.

An example illustrates this point. Suppose that Emma had offered a particular mattress for sale at £1,000 for three months, genuinely believing that that was a realistic price for a mattress of that specification. However, unknown to Emma, a competitor was, at the same time, offering a comparable mattress for £800. As a result, Emma makes no sales at all of the mattress at the Reference Price of £1,000. When it realises the presence of the competitor product, Emma discounts the mattress to £750 and markets it as “£1,000 £750” whereupon sales of the mattress soar and Emma sells 100 mattresses on Day 1 of the promotion.

On the CMA’s approach to the FVR, since Emma made zero sales of the mattress at £1,000, every single customer who chooses to buy the mattress for £750 on Day 1 has been misled into thinking they are getting a good deal. I do not consider that the average consumer would share that view. Certainly the average consumer, on being told that no sales were made at £1,000 would initially be sceptical about whether £1,000 was a realistic price. However, a good number of those average consumers would have been using online research and price comparison tools before making a purchase (see paragraph ‎73.iii) above) and so would have declined to purchase the mattress at £1,000. On being told the full facts, purchasers on Day 1 could reasonably feel that they were getting a good deal. They would feel that their decision not to purchase at £1,000 was vindicated by Emma’s decision to reduce the price significantly. Indeed the sheer number of Day 1 purchasers buying the mattress for £750 might reinforce a consumer in the belief that a good deal was being offered since so many were taking it up.

I quite accept that if the mattress was still being advertised as “£1,000 £750” many weeks later, purchasers at £750 might have a somewhat different view. After a period £1,000 will no longer be a realistic Reference Price. In addition, the more sales that are made at £750, the more likely an average consumer would be to regard £1,000 as an unrealistic Reference Price. However, I do not accept that purchasers on Day 1 at £750 would regard the Reference Price of £1,000 as necessarily unrealistic even if no sales were actually made at that price.

In his oral submissions on behalf of the CMA, Mr Williams KC said that, in asserting that Emma’s commercial practices were misleading, the CMA was not making any assertions about Emma’s subjective intention. No doubt the CMA regards that as a softening of its position. In any event, the CMA would have found it difficult to make a case based on subjective intention given that it has chosen to bring its claim under Part 8 and so has had no opportunity to cross-examine on matters of subjective intention. Whatever the CMA’s reasons, in my judgment the absence of a consideration of subjective intention shows a flaw in the CMA’s approach. Put simply that approach to FVR ignores a consideration that the average consumer would consider to be of real relevance, namely the presence or otherwise of a genuine and (perhaps) reasonable belief on Emma’s part as to whether a Reference Price is a realistic price for the product in question.

I am reassured in my view that this would be a relevant consideration for the average consumer by the fact that it forms part of the ASA’s and the CTSI’s guidance. That guidance does not have the force of law. It is not binding on me. However, the views of the ASA and of the CTSI on the perspectives of an average consumer are entitled to a degree of respect, while not being determinative given that I am concerned with the perspectives of an average consumer of Emma’s specific products.

It is, in my judgment, of relevance that when considering sales volumes (see paragraph ‎45.iii)) the ASA’s guidance specifically envisages that low sales volumes at a reference price on their own are not determinative since, even if sales volumes are low, an advertisement might not be misleading if a Reference Price is a “realistic price”. The 2018 CTSI Guidance makes the same point in terms (see paragraph ‎49 above). I am reassured that the approach of both the ASA and of the CTSI is consistent with my own analysis above of how an average consumer of Emma’s specific goods would think.

I recognise that the ASA, in its ruling considered in paragraphs ‎53 to ‎57 above, attached significance to the fact that only 17% of sales of the relevant product were made at the Reference Price. However, its overall conclusion was that it was the combination of relatively low sales at the Reference Price and the fact that the product had been on offer at that price for an insufficiently long period that led to the finding of breach. I note that Emma and the CMA have, in material aspects, agreed the text of an enforcement order (if one is to be made) relating to Duration Requirements.

I was shown the judgment of Etherton J (as he then was) in Office of Fair Trading v The Officers Club Ltd and another [2005] EWHC 1080 (Ch). The central question raised in that case was whether a “bricks and mortar” retailer’s advertisements relating to its “70% off strategy” were misleading, and hence unlawful, under The Control of Misleading Advertisements Regulations 1988 and EA 2002 as then in force.

In Officers Club, the Office of Fair Trading (OFT) put the trader’s subjective beliefs at the heart of their case. Their central assertion was that the trader’s advertising contained an implied representation that the 70% discount was a “genuine” discount (see [75] of the judgment). That representation was false because the Reference Price that supported the claim of the discount was an artificial or inflated price set with the overriding purpose of claiming the subsequent discount (see [70] of the judgment). The OFT sought to substantiate that allegation by asserting that the trader never expected to offer or sell any significant proportion of its goods at the higher Reference Prices. Those Reference Prices were, therefore, never fixed in good faith, but were simply a vehicle to enable the trader to claim it was offering a significant discount.

The court held that a reasonable customer would have regarded the trader’s advertising as impliedly stating that the Reference Price was a “genuine price as distinct from, and by contrast with, an artificial price” (see [157] of the judgment). The court also held that one aspect of a genuine price was that the seller honestly believes that the price is an appropriate sale price for the goods ([158]). Moreover, the advertising contained an implied representation as to the quantity of goods offered for sale at the Reference Price as being a substantial or significant proportion of the goods. It also contained an implied representation that goods had been sold at the higher Reference Price for a reasonably substantial period of time (see [163]).

Having formulated the implied representations in that way, Etherton J made the following evaluative finding at [161]:

Provided that the higher price was a price at which TOC [i.e. the trader] at the time honestly believed that the goods could then be sold in significant numbers, and provided significant numbers of the goods had in fact been placed by TOC on the market for sale at that price, I see no reason why the ordinary, reasonable consumer paying the discounted price would believe that he or she had been misled and deceived merely because TOC had always intended to reduce the goods to the discounted price in order to achieve a higher and quicker turnover at that price.

At [162], Etherton J noted that his conclusion at [161] was expressed by reference only to the genuineness of the trader’s belief because the OFT had not argued that there was a requirement that the belief be reasonable as well as genuine. However, he noted that evidence that suggested a belief was not reasonable (for example that the Reference Price was not comparable to prices charged by competitors) might indicate that the trader did not hold a genuine belief that goods could be sold at that price.

Thus, in Officers Club, the court concluded that a trader’s subjective beliefs as to whether a significant number of goods could be sold at a Reference Price were highly relevant to the question whether its advertising materials were misleading. Both parties rightly point out that Officers Club (i) concerned a very different “bricks and mortar business” and (ii) was decided a long time ago by reference to that specific business at a time when consumer behaviour could well have been different. I would add that Etherton J’s conclusions would necessarily have been reached in the light of the OFT’s submissions that the trader’s subjective beliefs were relevant..

Accordingly, Officers Club is not an authority that sets out any principles on the interpretation or application of the Regulations. Nor is it even an example of how the Regulations have been applied in similar situations since (i) it was not concerned with the Regulations at all and (ii) the business it analysed was very different and (iii) Etherton J was considering the perspective of consumers over 20 years ago and that perspective could well have changed since then.

However, putting matters at their very lowest, it can be seen that Officers Club is not inconsistent with my conclusion that Emma’s subjective beliefs do matter. I do not consider I need to consider “bright line” questions such as whether use of a Reference Price is necessarily not misleading if Emma genuinely believes it could sell significant quantities of the relevant product at that price. I do not need to determine whether any such belief also needs to be objectively reasonable. I conclude simply that:

On the basis of my conclusions set out in paragraph ‎111, I can analyse a further hypothetical situation. Suppose that Emma considers that a realistic selling price for a particular mattress is £1,000 in the sense that it could make good quantities of sales at that price to consumers who are less price sensitive or less inclined to wait for a discount. Emma makes some sales at that price. However, Emma decides that its commercial interests will be advanced if it offers the mattress for sale for £750, hoping that this will induce more price-sensitive consumers to make a purchasing decision reasoning that lower profit margin on each individual mattress will be compensated by higher aggregate profits from increased volume. Emma’s commercial judgment is vindicated and after a week it has sold many mattresses for £750 and come nowhere near meeting a 1:2, or even 1:3 or 1:4 FVR.

I will not conclude that an average consumer who purchases the mattress for £750 in that first week of discounting would necessarily feel deceived or misled. More likely, in my judgment, is that the average consumer in that first week would feel that his or her decision to delay the purchase has been vindicated. By waiting, that consumer has obtained, for £750, a mattress that Emma, with all of its knowledge of the market, genuinely believed could have been sold for £1,000 and of which sales were made at that price. The fact that numerous other consumers obtained that deal in the first week would not, in my judgment, vitiate an average consumer’s belief that he or she had obtained a good deal.

Again I accept that the longer the mattress is advertised at “£1,000 £750” the less secure the conclusion above would become as the less realistic the £1,000 Reference Price will become as a comparator.

I have considered carefully whether the situation that I have considered in paragraph ‎112 is a real-world scenario. If it is a purely theoretical construct then it will shed little light on how an average consumer would perceive Emma’s actual sales practices. The CMA suggests that the situation is not a real-world scenario because Emma has put forward no evidence to establish the hypothesis on which it rests, namely that Emma expected it could make good quantities of sales of its mattresses at undiscounted Reference Prices.

In the first place, I do not consider that Emma can be criticised for not putting in evidence as to its expectations of selling large volumes of mattresses at a particular Reference Price. This is not a case like the ASA’s investigations considered in paragraphs ‎53 to ‎59 in which a particular promotional offer is under examination. Rather, the CMA is asserting that because Emma makes insufficient sales at an undiscounted Reference Price it necessarily follows that its use of Reference Prices is unfair and misleading. In making that assertion, the CMA says that it is not asking this court to consider subjective beliefs (see paragraph ‎100 above).

Moreover, I consider that there is some evidence of Emma’s subjective beliefs. I have accepted Mr Schmoltzi’s unchallenged evidence that he considers Emma’s undiscounted Reference Prices to represent good value (see paragraph ‎41 above). I do, therefore, consider the example in paragraph ‎112 to represent a real-world scenario, rather than a purely theoretical construct.

Emma has committed the breaches of the Regulations that are set out in paragraphs ‎81 to ‎83 above. I will not, however, conclude that Emma has committed Schedule 13 infringements more generally than that.

The ASA has certainly found that specific promotions made misleading claims in advertisements (see paragraphs ‎53 to ‎59 above). I accept that this finding, together with Emma’s admissions of specific breaches involving the use of Reference Prices described in paragraph ‎82 above, could be symptomatic of a wider malaise involving Emma’s use of Reference Prices.

I also accept that the data raises a question mark. That data reveals a small proportion of sales taking place at Reference Prices. Moreover, the small proportion continued even after Emma took action to address the CMA’s concerns about the period for which products were on promotion (see, in particular, the table set out in paragraph ‎64 above).

However, on balance, I have concluded that the CMA’s assertion of a wider category of Schedule 13 infringements is based on insufficiently secure foundations:

I took it to be common ground that the breaches referred to in paragraphs ‎81 to ‎83 above caused, or were likely to have caused, the average consumer to take a transactional decision which he or she would not otherwise have taken. Given the breadth of the concept of “transactional decision” to which I have referred in paragraphs ‎10 and ‎11 above, I do not consider that proposition could seriously be disputed. Mr Schmoltzi’s own evidence is that it is an average consumer’s perspective that a discounted price represents a good deal that acts as an inducement to the average consumer to purchase mattresses or, at the very least, to browse Emma’s website and products listed thereon.

For similar reasons, if I had accepted that Emma’s infringement of the Regulations went beyond those admitted I would have accepted that such infringements caused, or were likely to have caused, the average consumer to take a transactional decision that he or she would not otherwise have taken.

In order to show that any infringements of the Regulations have harmed the collective interests of consumers, it must be shown that harm is caused to a section of the public rather than to an individual consumer. Such harm may be inferred from an accumulation of individual instances of infringement (see [188] of Purely Creative and the authorities referred to therein).

Emma argued that, even though it admits that some uses of Reference Prices were deceptive or misleading, there could be no “collective harm” on the basis, in essence, that the CMA have not shown that any purchasers were induced to make purchasing decisions which they regret. On the contrary, Emma’s customer satisfaction statistics and consumer awards show that its customers are generally satisfied with their purchases. I am unpersuaded by that argument. The misleading uses of Reference Prices that Emma admits involved a large number of customers and potential customers visiting Emma’s website. It is no answer to say that a good number of customers were ultimately satisfied with their purchase in circumstances where misleading practices have had a causative effect on a transactional decision. Moreover, I accept the CMA’s point that, conceptually, customers’ reported satisfaction levels could be reduced if they were told that Emma’s use of Reference Prices was misleading.

Overall, even though I have not accepted the CMA’s case on the wider existence of Schedule 13 infringements, given Emma’s admissions, I conclude that Emma has committed some Schedule 13 infringements. The pre-conditions for making an enforcement order are present.

The admitted Schedule 13 infringements mean that I have power to make an enforcement order. However, for the reasons set out below, I will not make such an enforcement order.

Imposing a 1:2 FVR will not address the Schedule 13 infringements summarised in paragraph ‎81 above. Emma and the CMA have agreed the text of provisions which, if included in an enforcement order, would address those infringements. In a similar vein, the infringements summarised in paragraph ‎83 have been addressed to the CMA’s satisfaction by Emma giving undertakings. Therefore, the only Schedule 13 infringements in relation to which an enforcement order referencing a 1:2 FVR would have utility are those summarised in paragraph ‎82 (as I have rejected the CMA’s case alleging a wider class of Schedule 13 infringements).

A difficulty that I have with an enforcement order by reference to a 1:2 FVR is that those areas in which Emma has admitted breaches involve much different FVR metrics. For example, Emma’s admitted breach in relation to Emma Premium mattresses in the Consultation Period involves an FVR of around 1:50,000. Imposing a 1:2 FVR would in my judgment involve a very real risk that the line is being drawn in the wrong place.

Moreover, as I have explained when considering the extent of Emma’s Schedule 13 infringements, there are real-world scenarios in which, because of the presence of countervailing considerations including those relating to Emma’s subjective intentions and beliefs, even a very low FVR would not necessarily result in a Schedule 13 infringement. Of course, in admitting the breaches summarised in paragraph ‎82 above, Emma can be taken to accept that there were no relevant countervailing considerations in those cases. However, the possibility remains that, if I made an enforcement order by reference to a 1:2 FVR, Emma would be in breach of that enforcement order in circumstances in which countervailing considerations mean that Emma committed no Schedule 13 infringement. That would risk being a disproportionate outcome since under the DMCCA, breach of an enforcement order would expose Emma to fines calculated by reference to a percentage of its turnover as well as criminal penalties.

The CMA points to the safety valves in its proposed enforcement order and suggests that those could be adapted to avoid the risk of Emma being in “undeserved” breach of a 1:2 FVR. However, while I acknowledge the care that the CMA has brought to its work on safety valves, I do not consider this to address the problem. The general proposition that there is a Schedule 13 infringement whenever the preponderance of sales is at a discounted price is insecure because of the relevant considerations that that approach overlooks (see paragraph ‎121). Given the potentially serious sanctions that would apply to any breach of the DMCCA, I consider that it would be wrong in principle to seek to impose a 1:2 FVR and then provide safety valves that dilute the effect of that requirement. That would be to proceed from the wrong starting point since, if Emma fails to identify a particular safety valve (or the CMA refuses to agree to it), Emma risks draconian consequences even if it has not committed a Schedule 13 infringement.

Relatedly, the situations that I have considered in paragraphs ‎97 to ‎99 or paragraph ‎112 link to a consideration of Duration Requirements. It may be that the Duration Requirements in the CMA’s draft order either permit, or could be amended so as to permit, the kind of promotions that I consider in those paragraphs. However, that would not address the concern. The examples in paragraphs ‎97 to ‎99 and paragraph ‎112 demonstrate that there are real-world scenarios in which an average consumer would not feel misled by use of a Reference Price in a period even if few consumers actually pay that Reference Price. That is a powerful riposte to the CMA’s case for imposing a 1:2 FVR.

Therefore, overall, I do not consider that I should make an enforcement order that imposes a 1:2 FVR as I am not satisfied that breaching a 1:2 FVR, even with the safety-valves that the CMA proposes, involves a Schedule 13 infringement. I also have concerns about the proportionality of imposing a 1:2 FVR. While I have not been able to find that Emma’s adherence to a 1:2 FVR as set out in the March 2025 Paper caused a decline in Emma’s business fortunes (see paragraphs ‎71 and ‎72 above), there must be a risk that this was the cause. It would be disproportionate to require Emma to run the risk of a potentially significant decline in its business fortunes given the issues that I have identified with a 1:2 FVR.

Emma made other objections to an enforcement order based on a 1:2 FVR. For example, it suggested that the CMA was seeking, by the back door, to impose a new business strategy of “everyday low prices” on Emma. It suggested that Emma was being unfairly targeted as a relatively small participant in the market and that, if the CMA wished to impose a 1:2 FVR, it should do so on an industry-wide basis by asking Parliament to change the law. It submitted that no European jurisdiction has sought to impose an FVR and that the UK should not do so either, whether by way of legislation or the CMA’s use of enforcement orders.

Those submissions touch on matters of real difficulty and complexity. I do not, however, need to address them. The reasons I have outlined above in my judgment represent a sufficient reason in this case for declining to impose an enforcement order by reference to a 1:2 FVR.

Some submissions were made as to what I should do if I declined to make an enforcement order referencing a 1:2 FVR. In oral argument, Emma suggested that a 1:19 FVR (which would require Emma to make only 5% of its sales at the Reference Price) would be more palatable. Alternatively, it suggested a requirement that:

Emma shall not engage in conduct which amounts to misleading price reference promotions, by using or setting a strike through reference price at a level at which it has no reasonable expectation of achieving significant sales.

I am conscious that a lot of effort and thought has gone into a 1:2 FVR on both sides. I have rejected the request that I make an enforcement order by reference to that level of FVR. However, I consider that rather than simply selecting something different, I should give the parties an opportunity to agree on the terms of an enforcement order that takes into account the conclusions I have expressed in this judgment. If the parties cannot agree, then I can hear further submissions on the terms of an enforcement order (if one is to be made) at a hearing on consequential matters. That was the approach that both parties suggested early in their respective submissions when they asked that I make a “decision in principle” on the kind of enforcement order I would be minded to make.

I will not make the enforcement order the CMA asks me to that references a 1:2 FVR (or similar ratio). I will hear further submissions on whether, and if so on what terms, the court should make any enforcement order. To that end the parties should liaise with a view to agreeing a time-estimate for a further hearing in Michaelmas Term 2026 to dispose of these proceedings and to address consequential matters. Having done so, they should approach my clerk with a view to fixing that hearing.