Price testing (FMCG): ethics and legality—what’s allowed?

Price testing in FMCG means running controlled experiments—like A/B prices online, split-store pilots, limited‑time discounts, or regional trials—to learn how different price points, promotions, and displays affect demand, revenue, and margins. Think of it as turning the price knob carefully to see how shoppers respond, then locking in what’s fair, legal, and profitable.

What it is not: price testing is not coordinating prices with competitors, not imposing fixed minimum retail prices on independent retailers, and not using fake “was” prices or hidden fees to manipulate consumers.

Why FMCG cares: grocery and CPG face frequent purchases, heavy promotions, and thin margins. A small pricing mistake can trigger regulator scrutiny or erode trust; a well‑designed test can safely improve both customer value and performance.

At a glance: what you can test (and what crosses the line)

Generally OK with guardrails:

• Time‑bound A/B price tests and regional pilots with truthful, clear price displays
• Loyalty‑only prices with unambiguous eligibility and terms
• Dynamic/personalized pricing with appropriate disclosure (especially in the EU) and sound data ethics
• Unit price comparisons and pack‑size trials with transparent unit pricing

Risky or unlawful:

• Sham reference prices or misleading strikethroughs (fake “was $X” claims)
• Hidden or drip fees that obscure the total price
• Imposing minimum resale prices on retailers (RPM), especially in the EU/UK; state‑level risks in parts of the U.S.
• Sharing sensitive current/future pricing with competitors under the guise of “testing”
• Price increases on essentials during declared emergencies (price‑gouging rules)

The sections below unpack the legal and ethical boundaries in the U.S., EU, and UK, with practical examples and citations you can hand to counsel.

Reference and strikethrough pricing: the safest way to run “Was/Now” tests

United States

• The FTC’s Guides explain that “former price,” “list price,” and “compare at” claims must be truthful and not misleading. A “was” price should be bona fide—actually offered for a reasonably substantial time. See the official text in the eCFR at 16 CFR Part 233 — Guides Against Deceptive Pricing (FTC/eCFR, current).
• Practical takeaway: Keep a substantiation file for every reference price claim—SKU‑level dates, channels, and geographies where the prior price was actually charged. The FTC’s overview of pricing claims in its business portal is a helpful orientation: FTC Business Guidance on pricing claims (FTC, ongoing resource).

European Union

• When you announce a price reduction, the “prior price” shown must generally be the lowest price charged in the 30 days before the reduction (Article 6a of the Price Indication Directive as amended). See the Commission’s overview of the rule: Price Indication Directive, Article 6a (European Commission, overview), and interpretive detail in the Commission Notice on Article 6a (2021) (European Commission, 2021).
• Practical takeaway: Keep 30‑day price histories per SKU and align strikethroughs and “‑% off” claims to that lowest price, noting any national nuances (e.g., perishables) with local counsel.

United Kingdom

• UK regulators focus on truthful reference pricing and clear unit pricing in groceries. See the CMA’s recent principles on discount and reference pricing: Discount and reference pricing principles (CMA/UK government, 2025 context) and the ASA/CAP’s practical advice on promotional savings: Promotional savings claims (ASA/CAP, 2022–2024).
• Practical takeaway: Substantiate “was” prices with real history; make unit pricing prominent and consistent across pack sizes to avoid misleading comparisons.

Dynamic and personalized pricing: what to disclose and when

• EU law requires that traders inform consumers when prices are personalized based on automated decision‑making (including profiling). This disclosure duty is in the Consumer Rights Directive Article 6(1)(ea) as amended: see the CRD consolidated text showing Article 6(1)(ea) (EUR‑Lex, 2022 consolidation).
• In the U.S. and UK, the touchstone is whether a fact would be material to the average consumer. If algorithmic personalization or loyalty‑only eligibility would likely affect purchasing decisions, make it clear in the offer. For U.S. background on price presentation and transparency, see FTC Business Guidance on pricing claims (FTC, ongoing resource). In the UK, advertising standards also expect clarity around significant conditions; see ASA guidance on promotional savings (ASA/CAP).
• Practical guardrails:
  • Explain loyalty‑only prices upfront (e.g., “With Club Card”).
  • Avoid dark patterns (e.g., deceptive urgency) and don’t use sensitive attributes in personalization.
  • If personal data fuels pricing, align with GDPR transparency (EU) and your privacy notices.

Competition law boundaries (RPM and coordination)

European Union

• Fixed or minimum resale price maintenance is a hardcore restriction excluded from the block exemption under the 2022 Vertical Block Exemption Regulation. See Regulation (EU) 2022/720, Article 4(a) (EU OJ, 2022). The Commission’s 2022 Vertical Guidelines further detail RPM treatment as hardcore.
• Practical: You may recommend or set maximum prices, but do not set or enforce minimum/fixed resale prices, including through tactics that effectively prevent discounting.

United Kingdom

• RPM is a serious infringement under the Competition Act 1998 and not covered by the UK VABEO. For a plain‑English view from the regulator, see the CMA’s blog Everyone loses out with resale price maintenance (CMA, 2022). VABEO guidance is available here: VABEO Guidance (UK Govt/CMA, 2022).
• Practical: Structure brand‑retailer pilots to preserve retailer autonomy. Fund promotions or recommend prices without dictating minimums or punishing discounting.

United States

• At the federal level, minimum RPM is judged under the rule of reason (not per se illegal) since the Supreme Court’s decision in Leegin Creative Leather v. PSKS (U.S. Supreme Court, 2007). Effects and context matter.
• Some states are stricter. For example, Maryland treats minimum RPM as per se unlawful; the Attorney General reiterated this stance in a 2017 RPM settlement release (Maryland OAG, 2017). Multi‑state FMCG pilots should obtain local antitrust advice.
• Across jurisdictions: Never exchange sensitive current or future pricing with competitors. “Clean‑room” analytics must avoid revealing competitively sensitive information in a way that enables coordination.

Price‑gouging and emergencies: pause or narrow tests

Many U.S. states activate price‑gouging laws during declared emergencies, especially for essentials (e.g., water, baby formula, fuel). Two illustrative resources:

• Florida defines gouging by “gross disparity” versus the average price in the 30 days before the emergency; see Florida AG consumer guidance on price gouging (Florida OAG, guidance page).
• North Carolina’s law prohibits excessive pricing on essentials once an emergency is declared; see NC DOJ price gouging landing (NC DOJ, 2023–2025).

Practical: Adopt a crisis pricing policy, identify essential SKUs, and suspend any test that would raise prices materially during an active emergency.

Practical checklist for compliant price experiments

Before you test

• Define the hypothesis and duration; avoid open‑ended “sales.”
• Substantiation file ready: prior price histories (U.S./UK reference rules; EU 30‑day rule for reductions).
• Disclosure copy drafted: loyalty eligibility, personalized pricing notices, material conditions.
• Antitrust review: no RPM, no competitor info sharing; retailer autonomy preserved.
• Vulnerable contexts: run a price‑gouging check; pre‑clear essential SKUs.
• Data/privacy: confirm GDPR transparency if personalization uses personal data.

During the test

• Monitor complaints and conversion impacts in real time; correct misleading messaging fast.
• Ensure unit pricing is consistent across test/control items and pack sizes.
• Keep immutable logs: prices by SKU, date/time, channel, geo; maintain versioned screenshots of displays.

After the test

• Document outcomes and compliance findings; archive the substantiation packet.
• Remove or update any claims that no longer reflect actual conditions (e.g., “introductory” labels).
• Feed learnings into a pricing and promotions playbook with legal guardrails.

FAQs (FMCG edge cases)

• Are BOGOs and multi‑buys OK to test? Yes, if truthful and clearly presented. Ensure unit pricing lets shoppers compare value fairly, and avoid implying a false former price. UK teams should track the CMA’s unit pricing work: CMA unit pricing case page (CMA, ongoing).
• Can we test personalized discounts? In the EU, disclose that the price is personalized via automated decision‑making under CRD Article 6(1)(ea): CRD consolidated text (EUR‑Lex, 2022). In the U.S./UK, disclose material conditions and avoid discriminatory use of sensitive attributes.
• What about shrinkflation or pack‑size changes? Permissible to test, but be scrupulous with unit pricing and avoid implying the same quantity at a “lower” price when quantity has changed. In the EU and UK, clarity of presentation is crucial under general consumer protection rules.
• Can manufacturers fund pilots with retailers? Yes—just don’t set minimum resale prices or punish discounting. In the EU/UK, RPM is a hardcore/serious infringement under VBER Article 4(a) (EU OJ, 2022) and the UK regime; in the U.S., consider Leegin (2007) and state caveats like Maryland’s stance.
• Do junk‑fee rules affect FMCG? The FTC’s federal rule targeting hidden fees presently covers tickets and short‑term lodging, per the FTC final rule on Unfair or Deceptive Fees (FTC, 2024) and the agency’s 2025 FAQs. But it signals a strong emphasis on total price transparency under Section 5 that applies to retail offers more broadly.

Quick snapshot: US vs EU vs UK (high‑level, non‑exhaustive)

• Reference/strikethroughs
  • US: “Former price” must be bona fide; see FTC 16 CFR Part 233.
  • EU: Announced reductions reference the lowest price in the prior 30 days; see PID Article 6a.
  • UK: CMA and ASA expect genuine references and clear unit pricing; see CMA principles and ASA guidance.
• Personalized pricing
  • EU: Explicit disclosure duty for automated personalization: CRD Article 6(1)(ea).
  • US/UK: Disclose material facts; avoid deceptive omissions (see FTC/ASA resources above).
• RPM/competition
  • EU: RPM is a hardcore restriction; see VBER Article 4(a).
  • UK: RPM is a serious infringement; see CMA RPM blog.
  • US: Rule‑of‑reason at federal level (Leegin, 2007), with stricter stances in some states (e.g., Maryland AG, 2017).
• Emergencies
  • US: State price‑gouging laws trigger during emergencies; e.g., Florida AG, NC DOJ.

Ethics that keep you on‑side (and protect brand trust)

• Truthfulness: No sham reference prices or token “introductory” labels. Anchor claims in real, recent history as reflected in FTC 16 CFR Part 233 and UK ASA/CAP guidance.
• Transparency: Make the total price and material conditions obvious. While the FTC’s fee rule directly targets certain sectors, its focus on transparent totals (see FTC Unfair or Deceptive Fees rule materials) underscores the expectation for retail clarity.
• Fairness: Avoid exploitative surges on essentials, especially in emergencies (consult state AG guidance cited above).
• Privacy and autonomy: Disclose automated personalization in the EU (CRD 6(1)(ea)); align data use with your privacy notices and GDPR where applicable.
• Competition compliance: Preserve retailer pricing freedom (EU/UK RPM prohibitions; U.S. rule‑of‑reason with state caveats) and avoid competitor coordination.

Bottom line: You can learn a lot from price experiments without tripping legal wires—if you keep claims truthful, disclosures clear, data and competition practices clean, and emergency contexts in view. Use the checklists above, build a substantiation habit, and involve counsel early for cross‑border FMCG pilots.