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BBC News18 November 2025
Eight firms under investigation over online pricing
82
Usefulness score
Exceptional UK focus on a major regulatory body (CMA) investigating household names under new powers, providing highly recognisable and current exam application for market failure and government intervention.
Summary
The UK Competition and Markets Authority (CMA) has launched investigations into eight companies, including StubHub, Viagogo, AA Driving School, and Wayfair, over potentially misleading online pricing practices such as "drip pricing" and misleading time-limited sales. This is the first action taken under new consumer protection powers, allowing the CMA to issue fines up to 10% of global turnover and order compensation without court proceedings.
Application
How to use this in an exam answer.
The UK's Competition and Markets Authority (CMA) is investigating companies like StubHub and Wayfair for practices such as 'drip pricing', where additional fees are added late in the online purchase process, or for misleading time-limited sales, which can distort consumer decision-making and reduce consumer surplus. These CMA actions, under the new Digital Markets, Competition and Consumers Act, demonstrate ex-post government intervention to address information asymmetry and consumer exploitation, which represent forms of market failure.
Evaluation
How to critically assess it.
However, the effectiveness of CMA interventions can be limited by the time taken for investigations and potential legal challenges from firms, delaying consumer protection. While fines up to 10% of global turnover are significant, they may not deter firms if the profits from misleading practices outweigh the penalties, particularly for large multinational corporations. Furthermore, these interventions address symptoms rather than underlying causes of market power that may enable such practices in the first place, leaving potential for future exploitation.