High Court rejects CMA’s fixed volume requirement for reference pricing in Emma Matratzen case

On 30 July 2026 the High Court issued its judgment in the CMA’s case against Emma Matratzen (Emma) claiming that Emma’s use of reference pricing when advertising discounts was misleading consumers and therefore in breach of the unfair commercial practices legislation. The CMA applied for a court order that would require Emma to comply with a fixed volume requirement (FVR) of a 1:2 ratio under which, for every two products Emma offers for sale at the lower price, it must have sold one product at the higher price referred to in the advertised discount. The case was brought under the pre-DMCC Act regime under which the CMA had to go through the courts to obtain undertakings or orders for companies in breach of the consumer protection rules. A breach of the unfair commercial practices is now enforced under the DMCC Act regime, under which the CMA has direct enforcement powers and can impose penalties of up to 10% of worldwide annual turnover of the infringing companies.

The Court held that the CMA had failed to establish that Emma’s use of reference pricing was misleading consumers and was not convinced that a fixed volume requirement of a 1:2 ratio is the appropriate test to establish whether certain discounts mislead consumers. The judgment concludes that a low ratio of sales at a reference price, measured against sales at the discounted price, is not on its own sufficient to establish a misleading commercial practice. The average consumer's assessment of whether a reference price is genuine is a multi-factorial question, in which the trader's subjective belief that the reference price is a realistic selling price and the product and market characteristics are all relevant. A fixed mathematical formula such as the 1:2 FVR does not reflect how the average consumer thinks and imposing an enforcement order to that effect would risk sanctioning conduct that is not, in substance, misleading.

Although this case relates to the sale of mattresses, it will be relevant for all businesses that use reference pricing, in particular online retailers that routinely advertise was/now comparisons. It makes it clear that compliance cannot be assessed solely by reference to numerical sales thresholds and that wider factors around consumer perception, commercial rationale and market context will all be relevant.

Background to the case

In November 2022 the CMA opened an investigation into Emma’s online sales practices and whether they were in breach of the unfair commercial practices legislation. The CMA subsequently wrote to Emma, outlining its concerns that very few advertised Emma products were sold at their full price and that discounts being offered were not genuine. Emma’s claims relating to when the sales were ending were also seen as misleading, as new sales would often start soon after the advertised end-date. The CMA also had concerns that Emma’s use of countdown timers and claims of high demand for certain products could mislead consumers.

In August 2024 the CMA issued Guidance on discounts and reference pricing principles for sales of mattresses online (Guidance), to ensure that businesses do not mislead consumers when using reference pricing and discounted offers.

Reference pricing involves suggesting to consumers that a product is being offered at a price that is lower than a higher comparative price, the reference price (eg “was £1,000, now £500”). The CMA’s Guidance makes it clear that where a trader chooses to use a reference price when advertising discounts, any comparison between the reference price and the discounted price must reflect a genuine price advantage, to avoid misleading the customer.

Whether a price comparison is genuine depends on:

• The duration of an offer: the “was” price must be offered for a sufficient period of time on the same website, immediately before the discount begins. That duration cannot be shorter than that of the discounted offer (the duration requirement).
• The volume of an offer: a sufficient number of sales should have been made at the “was” price. At least one product should have been sold at the “was” price for every two products sold at the discounted price (the volume requirement).

The Guidance makes it clear that both the volume and the duration requirements must be met, it is not sufficient for a trader to meet one requirement only. 

Proceedings before the High Court

In October 2024 the CMA started court proceedings against Emma over concerns that some of its online sales practices such as discounts and urgency claims, including countdown timers and high demand prompts, mislead consumers.

In May 2026 the CMA secured a court settlement with Emma after the company admitted that it breached consumer law by using misleading countdown timers and false high demand messages and discount claims. As part of the court order Emma has given binding undertakings to:

• Stop using misleading countdown timers, false ‘high demand’ and false discount claims
• Ensure that future claims are clear, accurate and do not create a false impression that consumers need to act quickly
• Refrain from using “limited time” sales where substantially similar deals continue after the deadline
• Put in place robust compliance measures, including monitoring compliance with the undertakings, reporting to the CMA and taking swift action to address potential breaches

However, Emma did not settle the remaining aspect of the CMA’s case, in relation to reference pricing, more specifically the volume requirement. Whereas Emma is prepared to comply with the duration requirement for reference pricing as set out in the CMA’s Guidance, it challenged the CMA’s volume requirement as set out in the Guidance and its request for an enforcement order based on the 1:2 FVR.

Emma argued that the CMA's volume requirement in the Guidance, under which it is required to limit the number of products sold at a discount, goes beyond the requirement set out in the legislation that a price advantage claimed by a trader must not be misleading or unfair, and harms consumers by denying them access to popular deals.

The judgment

The High Court refused the CMA’s application for an enforcement order that would require Emma to comply with the 1:2 FVR in relation to reference pricing. It rejected the CMA’s claim that reference pricing becomes misleading when the vast majority of sales are made at the discounted price and the 1:2 ration has not been met.

An average consumer would not necessarily feel misled if Emma was not complying with the rigid numerical 1:2 FVR. Whether or not a reference price is genuine depends on a range of factors, including the length of time products were offered at the higher price, market conditions, the nature of the product and the retailer’s genuine belief that the reference price was realistic.

Importance of the trader’s beliefs and commercial intentions

The judgment criticised the CMA for failing to consider Emma’s subjective belief that it could achieve significant sales at the advertised “was” price. The Court accepted that a trader’s subjective intentions are not by themselves determinative of whether a price representation is lawful. However, where those beliefs are objectively reasonable, they may be relevant in demonstrating that the reference price was genuine rather than artificially inflated to create the appearance of a discount.

Consideration of market characteristics

The Court placed weight on the specific characteristics of the mattress market. Consumers purchasing mattresses are likely to invest time researching products, comparing prices and delaying purchases until promotions become available. Because consumers monitor prices over extended periods, they may be aware of prior pricing levels and make purchasing decisions based on that knowledge. 

Proportionality and appropriateness of the proposed order

Although during the course of the proceedings Emma acknowledged certain pricing infringements, the Court ultimately concluded that the specific order sought by the CMA was neither appropriate nor proportionate. The judge accepted that problematic examples of reference pricing had occurred, including instances where only a very small proportion of sales had taken place at the higher reference price. However, these failings did not justify imposing the CMA’s proposed 1:2 FVR as an enforceable standard.

A paper produced by Emma in March 2025 analysing the effect of new UK pricing practices introduced as a result of the CMA’s investigation suggests that the changed approach meant that UK consumers face higher prices when purchasing Emma products and that Emma’s market share and growth declined. Emma argued that it is paying an unfair commercial price for being the business the CMA has investigated and that other businesses are benefiting at its expense. While the Court had not been able to find that Emma’s adherence to the 1:2 FVR caused this decline, it concluded that it would be disproportionate to require Emma to run the risk of a potentially significant decline in its business fortunes.

What next?

As Emma admitted certain infringements during the court proceedings the CMA is entitled to obtain a Court order to address these infringements. The Court has invited the parties to seek to agree the terms of an enforcement order that takes into account the judgment’s conclusions. If the parties are unable to agree, the Court will hear further submissions on the terms of the enforcement order at a hearing on consequential matters.

The CMA has also announced that it has temporarily withdrawn its Guidance.

The CMA has been very active in bringing enforcement cases under its new direct enforcement powers. All investigations launched so far involve conduct that is always unfair, regardless of its impact on the average consumer’s decision. It remains to be seen whether the CMA will have the appetite to bring further reference pricing cases now that the Court has made it clear that the CMA will need to take into account a range of factors, such as the trader's subjective belief that the reference price is a realistic selling price, to determine whether reference pricing conduct qualifies as an unfair commercial practice.