The Office of Fair Trading (OFT) is to investigate pricing practices employed by companies, both online and in the high street, and how they “could potentially mislead consumers”.

At the same time, the watchdog is to carry out an in-depth study into how the habits and personal information of web users are used to target online advertising.

The study into online advertising and pricing will focus on prices that are “individually tailored using information collected about a consumer’s internet use”. It will be completed by spring.

The other study, into advertising of prices, will examine practices such as “baiting sales”, where only some products are available at the discount price and consumers may end up buying a full-priced product.

Also under the microscope will be so-called “reference prices”, where there is a comparatively high reference price compared to the sale price. The OFT gives the example of an offer on an item that “was £50, now £20”, or “50% off”.

It will also scrutinise time-limited offers, such as sales which finish at the end of the month or special prices which are available for one day only, as well the role of price comparison sites which may use some of the questionable practices.

The second study is due to be completed by summer 2010.

The decision to launch two separate studies follows the OFT’s announcement in August that it was planning to investigate the area of pricing and advertising, particularly in the online field.

If the OFT finds abuses, it could potentially take enforcement action against companies and make recommendations to the Government or regulators in specific sectors.

Heather Clayton, a senior director at the OFT, said: “These studies will ensure that we keep up to date with the latest developments and, in particular, on how new pricing and advertising practices are emerging and evolving online.

“It is very important that the OFT's approach to potentially misleading practices remains well-informed by a sound evidence base, so we effectively protect consumers while allowing firms to compete freely.”

Consumer groups said that areas likely to be targeted by the studies could include the energy and travel sectors.

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