The price isn't right: the AA drip pricing case

Following the imposition of the first substantive fine under the CMA’s direct consumer enforcement regime, the public version of the Infringement Notice lays bare the CMA’s approach to applying the new drip pricing rules and the setting of penalties.

On 15 April 2026, the CMA imposed a £4.2m penalty on the AA for failing to include mandatory booking fees in the headline prices shown to consumers when they booked driving lessons online. The CMA has now published a non-confidential version of the Final Infringement Notice (FIN), making it possible to understand how it approached the various aspects of this investigation, including the procedure it followed, the evidence relied upon to find substantive breaches of consumer law, and issues relating to penalties and consumer redress. This is helpful for businesses seeking to understand how the CMA is likely to wield its new powers in other cases.

The conduct the CMA found to be infringing - commonly known as “drip pricing”, where additional charges are revealed only at later stages of the buying process - had specifically been identified as one of the CMA’s enforcement priorities. This, therefore, was a fitting first use of the CMA’s new power to fine businesses for breaches of consumer law under the Digital Markets, Competition and Consumers Act 2024, which took effect in April 2025. 

The fine (together with other recent consumer enforcement developments, such as the penalty imposed on Euro Car Parks for failing to respond to a CMA information notice) also marks a shift away from the CMA’s “supportive” approach to enforcement. Whereas its previous focus was on publishing guidance and sending advisory letters to businesses to help them comply, the CMA is now willing to move swiftly and impose material financial penalties.

The facts and the CMA’s assessment of the conduct

The infringement, which took place between 6 April 2025 and 15 December 2025, concerned the way in which mandatory booking fees were presented on the AA and BSM websites when consumers booked driving lessons. When booking a lesson, consumers were required to pay an additional mandatory booking fee that was not included in the headline price shown at the start of the purchasing process. Instead, this fee was revealed only at the final payment page.

The CMA found that during the relevant period around 90,000 consumers were affected and that approximately £800,000 had been paid in mandatory booking fees. This means that the average affected consumer had paid an additional c.£9 to the AA in mandatory booking fees.

The CMA was clear that merely disclosing a mandatory fee at some point in the buying process is not enough. In most cases, the CMA said that it would be possible to show the full price – including all mandatory charges – from the outset, because a single inclusive price figure would fit on any device or medium.

During the relevant period, the AA changed its website so that consumers were told about the mandatory booking fee at an earlier stage. However, because the fee was still not included in the headline price until the final payment page, the CMA considered this to be non-compliant. The total price was reasonably calculable from the outset and should have been shown up front.

To avoid the infringements being repeated, the CMA directed the AA to ensure that all invitations to purchase driving lessons on the AA/BSM websites do not omit the total price of the product. This means that all mandatory booking fees, other fees, taxes, charges or payments that the consumer will necessarily incur if they purchase driving lessons must be included in the displayed price.

The investigation

Compared with investigations under the Competition Act 1998 (CA98) – which often last several years – this was a quick process. The CMA opened its investigation on 17 November 2025, issued a Provisional Infringement Notice on 6 March 2026, and issued the FIN on 15 April 2026. Such speed is consistent with the CMA’s stated ambition to embed the “4Ps” framework (pace, predictability, proportionality, and process) within its consumer protection regime. However, the pace was certainly facilitated by the fact that the AA settled the proceedings. It cannot be expected that cases not involving settlement (or conduct, such as drip pricing, that is relatively straightforward to categorise) will proceed so quickly. And it remains to be seen whether the pace of the CMA's other ongoing consumer protection investigations (including the other cases launched on 17 November 2025) will be comparable.

The penalty

The CMA’s approach to the imposition of the penalty in this case is of particular interest – revealing some of the differences between the consumer and competition enforcement regimes, which on their face are very similar (despite differences in terminology). 

Under the CA98 regime, fines are calculated by reference to the turnover of the “undertaking¹” that committed the infringement. There is no equivalent concept in consumer enforcement. Instead, when setting the starting point for the penalty calculation, the CMA can look up and down the corporate group from the infringing entity, to capture the UK turnover of parent companies and subsidiaries. In this case, the CMA did not limit itself only to using the turnover of the legal entity that received the FIN. It instead looked to the UK turnover of the parent company (AA Limited), which was reported on a consolidated basis and stood at £1.45bn.

The CMA assessed the harm from the infringements as “moderate” (given the relatively modest sums involved) but considered the AA’s culpability to be “high”, on the basis that drip pricing is squarely prohibited in the relevant guidance and the AA should have been aware of this. Combining these factors, the CMA arrived at a starting point for the fine of 15% of AA Limited’s UK turnover for FY25, amounting to £217.5m. The CMA (unsurprisingly) determined that no uplift to this amount for deterrence was necessary.

The AA appears to have co-operated fully with the CMA’s investigation, volunteering additional information in response to questions and responding quickly to follow-up questions via email without the CMA needing to issue further information notices. As such, the CMA applied a modest reduction of 5% to the penalty.

Upon taking a “step back”, at the next stage of the calculation the CMA concluded that a penalty of £206.6m would be disproportionate. The CMA noted several mitigating factors: (i) driving lessons were only a small part of the AA’s business; (ii) the infringements lasted less than one year; (iii) the total mandatory booking fees paid were relatively modest; (iv) the CMA was requiring those booking fees to be refunded to consumers; and (v) the AA had co-operated with the investigation. Taking those factors into account, the CMA applied a reduction of approximately 97% to the fine, bringing it down to £7m.

The CMA then applied the maximum 40% settlement discount to that £7m, producing a final penalty of £4.2m. This discount highlights the potential value of cooperating with the CMA and settling where an infringement is clear-cut, and is higher than what would be possible in CA98 cases. In return for the settlement discount, the AA was required to admit the infringement, cease the infringing conduct, and adhere to the settlement conditions (including agreeing not to bring an appeal or challenge any matter included in the FIN). The discount can be revoked if the AA fails to comply with those conditions.

Given that the first stage of the penalty calculation looks at a company’s entire UK turnover (rather than sales of the relevant product(s), as in CA98 cases), it seems likely that the CMA’s discretionary proportionality assessment will often be the step of the calculation that ultimately determines the size of the fine. This gives the CMA a considerable degree of discretion, and may render the earlier stages of the calculation somewhat academic, particularly for larger companies that offer many products and infringe in respect of only one of them.

Refunds

In addition to the fine, the CMA imposed “enhanced consumer measures" (ECMs), requiring the AA to process automated refunds for all affected consumers, repaying the booking fees affected by the infringing conduct.

The AA holds payment details for all consumers who paid mandatory booking fees during the relevant period, meaning that the refund process should (for the most part) be straightforward. However, there are provisions for instances where refunds fail.

The ECMs also contain reporting requirements. The AA must provide monthly progress updates to the CMA and a final written report. The CMA has also reserved the right to request further documents or information from the AA to check its compliance. 

The CMA’s focus on ensuring that consumers receive refunds is notable. ECMs are unique to the CMA’s consumer powers – they cannot be imposed in CA98 cases. And although it is possible for the CMA to approve a voluntary compensation scheme offered by a party to a CA98 case, none have been established to date. Recourse to (collective) litigation is therefore generally the method used to obtain consumer redress in competition cases, but class representatives in such claims have faced significant difficulties when it comes to distributing damages or settlement sums. The Competition Appeal Tribunal’s recent Waterside judgment (which we consider in this article) suggests that the Tribunal is now increasingly focused on the practicalities of distribution, with the aim of avoiding situations in which claimant take-up of an award of damages or a settlement sum is minimal (as in the case of Gutmann v SSWT, where less than 1% of the potentially available funds were claimed by class members).

Conclusion

The pace at which this investigation reached a conclusion, and the inclusion of a straightforward redress mechanism for affected customers, suggests that direct consumer protection enforcement could prove a more effective route for the CMA to achieve results on behalf of consumers than CA98 investigations. 

The FIN also illustrates that, owing to the way in which the starting point in the calculation process is determined, the CMA enjoys considerable discretion when imposing consumer protection fines (subject, of course, to the statutory cap of 10% of worldwide turnover). This discretion could potentially influence the way in which the CMA runs its cases. For instance, the prospect of high fines could enable the CMA to persuade firms to settle cases with extensive and onerous ECMs rather than challenge the CMA’s views on liability (during the investigation process and, potentially, before the High Court in any appeal).

However, as this is the CMA’s first decision using its new consumer enforcement powers, any conclusions that can be drawn are necessarily preliminary. Businesses facing similar scrutiny should therefore monitor how the CMA's other open consumer investigations develop.