CMA v Emma Sleep: let the reference pricing battles begin

On 4 June 2026, the long-expected CMA v Emma Sleep case will be heard in the High Court. Having resolved the other matters in the case (see our article here), the case will focus solely on whether Emma Sleep’s use of reference pricing breached UK consumer law.

Reference pricing is the practice of displaying a product’s current price alongside a higher ‘was’ or strikethrough price, to signal a discount or saving to consumers.

Why does this case matter?

From a consumer law perspective, it is widely understood that any reference price used must be a genuine price. Consumer regulators are alive to the fact that an artificial or inflated reference price can distort consumers’ perception of value.

The problem is that in the real world, the position is rarely black and white. In a world of dynamic pricing, how do you establish a genuine reference price? At what point does a slightly outdated reference price ‘tip’ from being a legitimate value indicator into a prohibited unfair commercial practice?

This matters legally because, under UK consumer law, there are no hard and fast rules. Under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), the CMA needs to prove that a misleading reference price would satisfy the ‘transactional decision test’ – i.e. that it would likely cause the average consumer to take a transactional decision that they would not have taken otherwise. In many cases, this may require evidence from behavioural economists.

This differs from drip pricing, where the evidential burden on the CMA is much lower, with no need to satisfy the transactional decision test. This is one of the reasons why the CMA’s drip pricing case against the AA/BSM moved so quickly, settling with a £4.2m penalty within just five months.

Equally, the UK does not have a direct equivalent of the ‘30-day rule’ that exists under the EU Price Indication Directive, which means the reference ‘was’ price must be the lowest price actually charged for the product in the 30-day period that immediately precedes the price reduction claim.

CMA reference price guidance

In an effort to provide some clarity, the CMA did issue detailed guidance on reference pricing after concluding its investigation into Simba Sleep in August 2024. This builds on the CTSI Guidance for Traders on Pricing Practices, which is more high-level and principle-based.

The CMA guidance outlined two core principles:

• the 1:2 ‘volume requirement’ – that for every one unit sold at the higher ‘was’ price, no more than two units may be sold at the lower price; and
• the 1:1 ‘duration requirement’ – that the length of the lower promotional price must not exceed the length of time the reference price was offered.

The guidance has been criticised by some as arbitrary and an unwelcome return to the prescriptive BIS guidance that was scrapped over ten years ago.

More importantly, the practical application of the guidance is muted by the fact that it is addressed at online sellers of mattresses. Although the CMA reserves the right to refer to the guidance in investigations into other sectors, many businesses have legitimately argued that the market for selling mattresses online is hardly an appropriate benchmark for other sectors – for example, FMCG and fashion retailers – who operate in totally different markets.

Either way, the lack of legal clarity in this space may explain why Emma Sleep has dug its heels in and, unlike Simba, refused to sign up to undertakings with the CMA that are in line with the (high) bar it sets for establishing reference pricing in its own guidance.

Previous Trading Standards cases and the need for case law

This won’t be the first time the UK courts have heard a consumer law case that relates to reference pricing.

However, previous cases have all involved criminal prosecutions brought by local authority Trading Standards. This includes a £300,000 fine imposed on Tesco for a misleading strawberries promotion in 2013 and a £60,000 fine imposed on the jeweller H Samuel for failing to display intervening prices in a ‘was’/‘now’ promotion for diamond rings in 2019.

While the CMA will no doubt argue those cases remain relevant, they did not produce detailed reported judgments that provide meaningful insight on the application of the transactional decision test to reference pricing. Given the relatively low penalties involved, the Trading Standards cases were not appealed.

The CMA may therefore prefer to establish a more solid judicial precedent before it starts aggressively enforcing the DMCCA against companies that engage in misleading reference pricing and seeking to impose very high civil penalties without going to court.

Nevertheless, it’s important to note that the CMA can’t impose a penalty on Emma Sleep in this case. That’s because the investigation was launched back in 2022, before the CMA was granted new enforcement powers in the DMCCA. However, it is widely expected that the CMA will use it as a test case for some of the arguments it may seek to run in future reference pricing enforcement cases under the DMCCA.

Lessons from Australia: Will the CMA follow the ACCC’s approach?

As a sign of what may be to come in the UK, it’s informative to look at Australia.

The Australian Competition and Consumer Commission (ACCC) is ahead of the CMA in having tougher civil consumer protection enforcement powers. It has been using those powers for some time to aggressively enforce against unfair pricing practices – including most recently, reference pricing.

Indeed, Emma Sleep has already faced enforcement action in relation to reference pricing in Australia. In April 2026, the Australian Federal Court ordered Emma Sleep Pty Ltd and Emma Sleep Southeast Asia Inc to pay a combined A$15 million in penalties for false or misleading representations about sale prices (including use of strikethrough pricing and percentage discount/savings claims). The Court found this conduct formed part of a deliberate marketing strategy and that senior management turned a blind eye to compliance.

Another key benchmark case in Australia in relation to reference pricing is the ACCC’s case against Coles Supermarket.

In May 2026, the Federal Court found that Coles had made false or misleading representations about its ‘Down Down’ discounts. The ‘Down Down’ programme was introduced by Coles in June 2010 and was marketed as a campaign designed to reduce the regular shelf price of commonly purchased products on a longer-term basis, offering customers predictable value and reducing the cost of their shopping basket.

However, of the 14 ‘Down Down’ tickets considered in a liability hearing, the Court found misleading representations in relation to 13.

The level of penalty in the Coles case will be determined in a subsequent hearing. In Australia, the maximum penalty available for each breach of the Australian Consumer Law (for contraventions from 10 November 2022) is the greater of A$50 million; three times the benefit obtained; or 30% of adjusted turnover during the breach period.

So, what does this mean for reference pricing enforcement under the DMCCA?

Back in the UK, it’s telling that of the 14 cases brought by the CMA so far under the DMCCA (post April 2025), not one relates to reference pricing. The CMA’s initial enforcement blitz has primarily focussed on drip pricing, time-limited offers and fake reviews.

However, as noted above, this most likely reflects a desire on the CMA’s part to try to establish additional case law clarity in the High Court before it can commence with aggressive enforcement action under the DMCCA.

Either way, as the CMA will always need to satisfy the transactional decision test in a reference pricing case, the issue looks ripe for future contentious debate, potentially involving evidence from behavioural economists as to how much impact a reference price really has on consumers.

Let the reference pricing battles commence…

Get in touch with TLT’s consumer law experts if you’d like to discuss reference pricing. Our team has extensive experience of helping retailers and global digital platforms develop practical pricing policies, including advising on price establishment periods.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.