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Dynamic pricing has become a hot topic after its controversial use in the sale of tickets for Oasis's highly anticipated reunion tour – but what does ‘dynamic pricing’ really mean and is it permitted under Irish consumer law?
In this article, we delve into the relevant consumer protection legislation in an effort to address this thorny question which has seen the Competition and Consumer Protection Commission (CCPC) announce an investigation into last week’s ticket sales on foot of over 100 complaints to the watchdog, with a similar move also being made by the UK watchdog, the Competition and Markets Authority under equivalent UK consumer protection laws.
1. What is ‘dynamic pricing’?
Dynamic pricing (also known as ‘real-time pricing’) is not currently defined under Irish or EU consumer protection legislation but is broadly understood to mean changing the price of a product in a highly flexible and quick manner to respond to market demands.
2. Is ‘dynamic pricing’ prohibited under Irish consumer protection legislation?
No. However, dynamic pricing may in some cases risk being a ‘misleading’ or ‘unfair’ commercial practice.
The relevant legislation is the Consumer Protection Act, 2007 (as amended) which transposed the Unfair Commercial Practices Directive (the UCPD) into Irish law (the CPA). Breaches of the CPA can lead to a variety of civil and criminal penalties, including compliance notices, requests for undertakings, prohibition orders or in severe cases criminal fines of up to €100,000. Following the implementation of the EU Omnibus Directive, the range of penalties has been significantly increased for breaches involving widespread infringements in more than one EU member state, with potential fines up to 4% of annual turnover in any affected Member State or up to €2m of annual turnover is not disclosed.
Misleading Commercial Practice
A ‘misleading’ commercial practice arises where a consumer is provided with false or misleading information in respect of certain matters – including, the price of the product and the way that price is calculated - which would cause the ‘average consumer’ to make a transactional decision which they would not otherwise have made.
Importantly, a ‘commercial practice’ is defined broadly to include any conduct or representation made before, during or after the consumer transaction. Therefore, accurate, clear, and consistent information should be provided to consumers throughout their transactional journey – particularly when it comes to matters such as price. The term ‘average consumer’ has been the subject of much debate in the case law of the Court of Justice and, while not defined in the CPA or UCPD, is understood through that caselaw to mean a notional, typical consumer who is reasonably well informed, reasonably observant, and circumspect, taking into account social, cultural, and linguistic factors.
Where false or misleading information is provided, for example, regarding price stability or there is a failure to disclose that prices may change due to demand, the trader could be deemed to be engaging in a misleading commercial practice.
It’s also worth noting that the omission or concealing of material information – including, the price of the product or the way the price is to be calculated – which is considered necessary for consumers to make an informed transactional decision may also constitute a misleading commercial practice.
Unfair Commercial Practice
A commercial practice may be considered ‘unfair’ where it is contrary to either or both:
It must also be likely to cause an appreciable impairment to an average consumer’s ability to make an informed choice in relation to the product concerned and so causes that average consumer to make a transactional decision that they would not otherwise have made. In considering whether a commercial practice is ‘unfair’, regard must also be had to the factual context taking into account all relevant features and circumstances.
This is a particularly broad provision under consumer protection legislation which could capture conduct by a trader which taken in all its circumstances is considered to be unjust given the overall consumer impact.
3. Is there any Irish or EU guidance on the use of ‘dynamic pricing’?
In 2021, the EU Commission issued a guidance note on UCPD which included commentary on the use of ‘dynamic pricing’. In its view, the UCPD permits traders to freely determine the prices they wish to charge for their products provided they adequately inform consumers about the total cost and how the cost is calculated where the price cannot reasonably be calculated in advance due to the nature of the product.
The adequacy and clarity of information provided to consumers is therefore a key determinative factor. However, the Commission did make clear, that in some circumstances 'dynamic pricing’ practices could meet the definition of ‘unfair’ under the UCPD – specifically citing as an example of a misleading commercial practice the situation where a business “raises the price for a product during the booking process, in particular after the consumer has put it in his digital shopping cart or proceeds to payment, without giving the consumer reasonable time to complete the transaction”.
4. Are there consumer benefits to ‘dynamic pricing’?
Despite the controversy, ‘dynamic pricing’ does offer certain potential benefits to consumers as it is intended to ensure that tickets are sold at market value. When it comes to live music events, part of the rationale put forward is intended to reduce the incentive for resellers to buy tickets in bulk and sell them at inflated prices.
Arguably, however, this issue has already been tackled by the Irish legislature through recent amendments to the CPA which introduced a new prohibition on the resale of event tickets acquired through automated means that circumvent purchase limits or other rules. This amendment, which has its genesis in EU law, is designed to ensure fair access to tickets and prevent bulk purchasing by resellers using bots.
5. Conclusion
While dynamic pricing is ‘definitely, maybe’ a familiar sales technique in the travel and hospitality sector, it has certainly hit a nerve with consumers when it comes to entertainments events. Key for traders engaging in this practice going forward is to ensure that throughout the consumer’s transactional journey information provided to consumers is accurate, transparent, and clear – and from there it is for the market to decide what is a fair price.
For further information on this topic please contact Katie O’Connor, Partner, Mairead O’Brien, Senior Associate, Denise Daly Byrne, Senior Associate or any member of ALG’s Investigations team.
Date published: 6 September 2024
