Price and discount indication and display in relation to consumers
The year of 2022 has brought many legislative changes in the field of consumer protection, from the transposition into Romanian law the Directives on contracts for the sale of goods, on digital content and services contracts, to the transposition of the Omnibus Directive.
Without attempting to provide a full analysis of the legislative changes, we hereby take a closer look at the last year Black Friday period concerning mostly the implementation of Omnibus obligations by the Romanian companies, as well as the National Authority for Consumers Protection’s perspective in this respect.
As Omnibus Directive represents a comprehensive package of changes in relation with consumers protection, this article will focus on more sensitive obligations of the companies, namely price and discount indication and display.
According to Omnibus Directive, in case of any price reduction announcement, traders are obliged to inform the consumer about the lowest price applied in connection with the product in question as of the last 30 days before the discount entered into force.
Considering the broad concept of “price reduction announcement” implemented by way of Omnibus Directive, the European Commission has issued the “Commission Notice – Guidance on the interpretation and application of Article 6a of Directive 98/6/EC of the European Parliament and of the Council on consumer protection in the indication of the prices of products offered to consumers”, which attempts to clarify this concept.
As per the provisions of the guidelines provided above, certain announced discounts do not fall under the obligation to indicate the lowest price as of 30 days, such as: discounts generated by price profiling activities, conditioned promotional discounts, price advantages which are accessible to a limited number of costumers.
However, such guidelines are not mandatory for the legal interpretation of the obligation concerned, meaning that the authority or – depending on whether an infringement in these matters has been established and challenged – the courts of law are not obliged to obey to the interpretation set out under the European Commission guidelines. We analysed whether such are taken into account by the authorities and our conclusion is that, as far as the National Authority for Consumers Protection is concerned, there is a trend in following the guidelines established by the European Commission.
On the other hand, mention should be made that, according to Romanian law, besides the obligation in terms of indication of the lowest price as of 30 days, traders are subject to a similar obligation concerning how the discount should be related to the previous/prior price of the product in question.
Thus, as a rule, when relating the discount to the previous/prior price of the product, traders should observe that the previous/prior price is represented by the lowest price as of the last 30 days in accordance with Romanian law.
For this purpose, when providing consumers with an announced discount, traders should be aware of the following obligations: (i) to indicate the lowest price of the product as of the last 30 days, (ii) to relate the discount to the lowest price of the product as of the last 30 days. Without further discussion, not observing the obligation to relate the discount to the lowest price as of the last 30 days, represents a misleading commercial practice under Romanian law.
One might ask what are the risks if those two obligations are not complied with. Well, to answer this question, since Omnibus Directive has increased the fines for non-compliance with the obligations in terms of price indication as well as in terms of misleading commercial practices, failing to comply with those obligations may trigger fines up to EUR 6,000, in case of infringement related to price indication, and up to EUR 20,000, in case of an infringement in terms of misleading commercial practices. Likewise, traders may be subject to additional measures such as: suspension of the activity until the misleading commercial practices are ceased; the cessation of the misleading commercial practices; the prohibition of the unfair commercial practices.
At the beginning of this article, we made a remark on the National Authority for Consumers Protection perspective in this regard. To this effect, in the 2022’s Black Friday period, the authority managed to carry out inspections’ proceedings all over the Romanian territory.
As a result, a high proportion of the infringements sanctioned are found in unfair commercial practices in relation to consumers, be it misleading omissions or incorrect actions in this respect.
What has come to our attention as a result of the analysis we have carried out, is that the authority seems to have a different interpretation regarding commercial practices concerning the display of the selling price of products in the framework of conditional promotions, more specifically when traders offer a discount directly at checkout, when certain conditions are met by consumers.
As background information, the Romanian law in terms of unfair commercial practices, almost identical to the provisions of the Unfair Commercial Practices Directive, establishes that the price of the product is considered an essential information in relation with consumers. Not providing the consumers with the price of a product may represent a misleading omission within the meaning of the applicable legislation.
As it can be observed, the law regulates this act in connection with the price of the product which is defined as the price inclusive of all taxes or, where the price cannot reasonably be calculated in advance, taking into account the nature of the product, how it is to be calculated.
Based on the authority ununiform perspective in this regard, in case of conditional promotions as described above, the price of the product is the price with all the price discounts applied, irrespective of the fact that the traders may apply such only when concluding that all conditions were met by the consumers. In practice, the authority refers to the price resulting after applying all the conditional discounts, as the final price.
Given the uneven practice to this effect of the authority, for example, for the same conditional promotion carried out in two different stores, the authority sanctioned this practice in one store and in the other concluded that the costumers were correctly informed about the selling price, it is clear that, whereas no official guidelines are implemented with regard to conditional promotions, traders may seem to be left with few options to ensure that they will not be sanctioned when conducting conditional promotions.
The effects of such interpretations of the authority may lead to fewer marketing actions due to the complicated, burdensome, and therefore economically inefficient way of implementing conditional promotions.
It is correctly understood not to challenge the importance of informing the consumers about the selling price, but the interpretation that traders are obliged to provide the consumers with the final price in case of conditional promotions, irrespective of the circumstances involved, may lead, in most cases, to an indirect prohibition of discounts applied directly at checkout.
To this end, in our experience, traders should be cautious when conducting such promotions and an analysis on a case-by-case basis should be carried out in order to make sure that the conditional promotions does not interfere with any of the obligations analysed above.
Sources:
Law 363/2007 on combating unfair practices of traders in relation to consumers and harmonising regulations with European consumer protection legislation;
Decision 947/2000 on the method of indicating the prices of products offered for sale to consumers, republished, with subsequent amendments and completions;
Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules (Omnibus Directive);
Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (Unfair Commercial Practices Directive).