Upmarket online delivery firm Ocado has been penalised for false claims in a price war with Tesco.

The Advertising Standards Authority (ASA) found that claims by the online retailer that it was as cheap as Tesco.com but with "Waitrose quality" were not true and the firm has been ordered not to repeat its claims while working on the current system.

Ocado last year changed its price-matching from supplier Waitrose to Tesco.com and claimed it carried, "Tesco prices. Waitrose quality. Ocado delivery. (We thought you could do with some good news today)" in an advert.

In the ad, Ocado said: “From today, we're matching Tesco prices on all household brands.* That means if you fancy a tub of Hagen-Dazs ice-cream, you'll pay exactly the same as you would at Tesco. But if you crave soft, sweet Waitrose strawberries on top, you can have that too, at the same price as Waitrose.”

The asterisk linked to a footnote that stated "*Standard retail prices matched on all identical products at Tesco.com. Does not apply to temporary promotions or special offers. Prices checked 10/03/08...".

Tesco said that it examined 3,811 items and found that Ocado was more expensive on 601 of them.

The ASA agreed that the advertising failed its rules on truthfulness and that Ocado that the company had tried to be fair, but that its systems and processes had let it down.

The ASA said in its ruling: “We noted Ocado pointed out that they were adding approximately 200 products to their range every week and those products would not be price matched until the next price match day. We noted their explanations for why the products were not price matched to Tesco prior to or at the time of their launch on the Ocado site.

“We considered, however, that consumers were likely to expect that, in view of the price match policy, when a new product was introduced to Ocado's range, it would be price matched to Tesco.com straightaway.

“We recognised the challenges that operating a robust price match policy could pose and we considered that Ocado had sought to implement the policy in a comprehensive way," it added.

"We nevertheless considered that, while a small number of unavoidable discrepancies were to be expected when carrying out a price match policy on this scale, there were factors which meant that they were at risk of failing to price match a large number of items.”

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