Short Rules on Price Reduction Campaign in Croatia

The Croatian Consumer Act (“CCA”) provides for the following specific types of sale: sales promotion (Croatian: akcijska prodaja), clearance sale (rasprodaja), seasonal sale (sezonsko sniženje), sale of defective goods (roba s greškom), sale of goods with an imminent expiry date (roba kojoj istječe rok uporabe) . 

Retailers are allowed to sell goods at prices lower than their usual prices but cannot do so as part of any of the above campaigns unless specific conditions have been met. However, retailers must not mislead the consumers when applying other, non-regulated price reductions. 

As with a regular sale, the retailer must inform the consumer about the conditions of the sale clearly, visibly and legibly. 

When announcing specific types of sales, retailers must make sure that the statutory conditions for applying these types of sales have been met. Otherwise, there is a risk that they might engage in unfair misleading commercial practices that are forbidden by the CCA. 

Apart from the minimum information on the type of sale, the CCA stipulates the following minimum content:

• in terms of price indication, all specific sale types have to apply specific rules on price indication described under (4).
• the period of sale needs to be specified only for seasonal and clearance sales, as described under (3).
• In relation to the sale of defective goods, the retailer must also clearly, visibly and legibly indicate on the goods or at the point of sale both that the goods are defective and the nature of the defect. In relation to the sale of goods with an imminent expiry date, the goods must additionally clearly, visibly and legibly indicate the final expiry date (e.g. the “use by" date in case of food).

There are limitations on clearance seasonal sales.

Seasonal sales can be introduced only twice annually each time for a maximum of 60 days. The winter seasonal sale starts on 27 December and the summer on 1 July. 

A clearance sale may only be announced in the following cases: termination of the retailer’s business activities; termination of use of the current business premises; termination of sale of a specific product; when the retailer’s business is seriously jeopardized and when the retailer is performing complex construction works inside or on business premises.

Given that an announcement of this type of sale must be related to one of the above circumstances, the sale period must clearly be limited. The exact period is determined in line with the specific circumstances.

The price indication has to include the reduced price and the lowest price at which the item was offered in the 30 days before the price was reduced.

The obligation to indicate currency in both HRK and EUR until the end of 2023 also needs to be taken into account. 

The price and the price per unit of measurement (when mandatory) need to be indicated in an unambiguous, easily identifiable and clearly legible manner for the consumer.

As in other aspects of business, retailers must respect the general competition law rules and not apply any unfair competition practices.

In terms of price reduction, retailers must not sell the goods under their wholesale price (including the VAT), which considered unfair trading, except in specific situations (e.g. the goods are due to expire soon or the price is being reduced for specific reasons by which the retailer is not undertaking actions that limit or obstruct competition on the market).

Under the CCA, the following fines can be imposed:

• A fine in the amount of HRK 10,000 (approx. EUR 1,326 ) to HRK 200,000 (approx. EUR 26,510) can be imposed on the retailer that is a legal entity;
• Fines ranging from HRK 5,000 (approx. EUR 660) to HRK 15,000 (approx. EUR 1,990) can be imposed on the responsible individual in the legal entity; 
• A fine in the amount between HRK 5,000 (approx. EUR 660) and HRK 15,000 (approx. EUR 1,990) can be imposed on the retailer if he/she is a natural person. 

In addition to the monetary fines, the competent authorities can also implement other sanctions, e.g. they may temporarily prohibit the retailer from selling goods until the identified irregularities are remedied.

Apart from these fines, retailers should also bear in mind that other fines may be imposed under other legislation regulating the sale of goods, e.g. the Croatian Trade Act.