New requirements for advertising with price reductions

The EU is constantly striving to achieve a comparable level of consumer protection within the member states. The provision in the Omnibus Directive of the EU (Directive 2019/2161), which makes precise specifications for the form in which a price reduction may be advertised, is probably also an expression of this objective.

According to the Omnibus Directive, in the future any announcement of a price reduction must indicate the prior price that the trader applied over a certain period of time previous to the price reduction. In principle, the prior price is defined as the lowest price charged by the trader within a period of at least 30 days prior to the application of the price reduction. Member states may set different rules for goods, which are liable to deteriorate or expire rapidly. Member states may also stipulate that, in the case of a progressively increasing price reduction, the previous price is the non-reduced price before the first application of the price reduction.

In addition, the Omnibus Directive contains a specification of the sanctions for infringing the provisions of the Price Indication Directive (Directive 98/6/EC). According to this specification, member states must consider the following criteria, which are expressly not to be understood as exhaustive, when imposing sanctions:

• the nature, gravity, scale and duration of the infringement;
• any action taken by the trader to mitigate or remedy the damage suffered by consumers;
• any previous infringements by the trader;
• the financial benefits gained or losses avoided by the trader due to the infringement, if the relevant data are available;
• penalties imposed on the trader for the same infringement in other member states in cross-border cases where information about such penalties is available through the mechanism established by Regulation (EU) 2017/2394;
• any other aggravating or mitigating factors applicable to the circumstances of the case.

Member states must transpose these requirements into national law by 28 November 2021. The amendments are to be applied from 28 May 2022, and legal uncertainties in individual cases are likely.

Germany has implemented the new price regulations with its Regulation Amending the Price Indication Regulation just in time. According to this regulation, whenever a price reduction for a product is announced to consumers, the lowest selling price must be indicated that was valid within the last 30 days (i.e. the minimum period specified by the EU) before the price reduction was applied. The obligation will also expressly apply to goods sold in bulk, for which no selling price, but only a unit price, must be indicated. The regulation makes use of the possible exception for progressively increasing price reductions. Price reductions for quickly perishable goods or goods with a short shelf life are completely exempt from the obligation if the required price is reduced due to an imminent risk of spoilage or an imminent expiry of the shelf life and this is made clear to consumers in an appropriate manner. Furthermore, the obligation will not apply to individual price reductions.

In addition, according to the explanatory memorandum of the German draft regulation, the new obligation should also not apply to:

• The pure use of general price statements without advertising the concrete, measurable price reduction, such as the advertising of "sale" or "low price".
• The mere indication of the reduced price without any indication of a previous price.
• For new products added to the range since there is no previous price for them.
• Promotions in the form of "1+1 free" and "buy 3 pay 2".
• Discounts based on loyalty programmes.

While implementing the Omnibus Directive, the German regulation also provides for a complete reorganisation of the German Price Indication Regulation. This is primarily intended to improve readability and accessibility. In addition to the regulation on advertising with price reductions, there are also changes to the content in connection with the labelling of deposit amounts, the positioning of the selling price, price indications in shop windows, the indication of quantities in the case of liquid loose goods offered for self-filling and the charging of electrically powered vehicles. The German legislator, on the other hand, does not consider it necessary to adapt the provisions on sanctions in terms of content since the criteria set out in the Omnibus Directive are already to be taken into account in accordance with the current legal situation.

Stakeholders in the German market should therefore keep an eye focused, not only on the changes resulting from the Omnibus Directive, but also on the changes to the price indication regulations made by the German legislator on this occasion.