Guest post by Laura Bakola (PhD candidate at Leiden University)
In September the CJEU issued a judgment on price
indications and the obligation of the trader to announce a price reduction on
the basis of the ‘prior price’ of the product. The case comes after the
amendment introduced by Directive 2019/2161, as
regards the better enforcement and modernisation of consumer protection rules (hereafter
Omnibus Directive), to Directive
98/6 on consumer protection in the indication of the
prices of products offered to consumers (Price Indication Directive, hereafter PID).
According to the amendment, any
announcement of a price reduction shall indicate the prior price applied by the trader for a determined
period of time prior to the application of the price reduction (Article
6a(1) PID); the prior price means
the lowest price applied by the trader during a period of time not shorter than
30 days prior to the application of the price reduction (Article 6a(2) PID).
The case involved a supermarket chain which had issued an advertising brochure containing product offers. One of the brochures contained price indications that were presented in the following manner:
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Concerning the
first price indication, a percentage was used, but the reduction was not
determined on the basis of the lowest price charged in the trader’s stores in
the 30 days prior to the offer, the latter being the same as the selling price.
Concerning the second price indication, the statement ‘price highlight’ was
used, while indicating a higher price than the lowest price charged in the 30
days prior to the offer. Against this background, the questions asked by the
referring court pertained to the interpretation of Article 6a(1) and (2) PID; namely,
whether these provisions require that a price reduction announced by a trader
in the form of a percentage, or in the form of a promotional statement intended
to highlight the advantageous nature of the announced price, must be determined
on the basis of the ‘prior price’, within the meaning of Article 6a(2) PID.
According
to the Court, although Article 6a(1) PID does not make it possible to determine
whether the price reduction must be calculated on the basis of the prior price,
as defined in paragraph 2 of that Article, account should be taken of the
Directive’s objectives, as well as the specific objectives pursued by the
provisions in question (paras 20-21). As regards the objectives pursued by the
Directive, these are the improvement of consumer information and facilitating
comparison of the selling price of products, in order to enable consumers to
make informed choices (Article 1 and Recital 6 PID); the selling price of
products must be unequivocal, easily identifiable and clearly legible, so that
that information is precise, transparent and unambiguous (Article 4(1) and
Recital 2 PID). Furthermore, both the Omnibus Directive and the PID were
intended to achieve a high level of consumer protection (Recital 1 Omnibus
Directive and Recital 2 PID). Interpretation of Article 6a PID as meaning that
it suffices to mention the ‘prior price’, without using it as the basis for
calculating the price reduction, would undermine the aforementioned objectives,
in particular that of improving consumer information (para 24). As regards the
specific objectives pursued by Article 6a PID, these were intended to prevent
traders from deceiving the consumer, by increasing the price charged before
announcing a price reduction and thus displaying false price reductions (para
25). Mentioning the ‘prior price’ for mere information purposes, without using
it as the basis for calculating the price reduction, would undermine that
specific objective, by allowing traders to mislead consumers through price
reduction announcements which are not real (para 26).
It follows that
the selling price of a product in a price reduction announcement cannot be the
same as the ‘prior price’, within the meaning of Article 6a(2) PID, or be
higher than it (para 27). The Court also clarified (para 28) that assessment of
a commercial practice consisting of displaying a price reduction, which is not
determined on the basis of the ‘prior price’, will be made with regard to the
relevant PID provision and not the provisions of Directive
2005/29 on unfair commercial practices (UCPD). Article 6a PID
specifically regulates aspects linked to price reduction announcements, thus
constituting lex specialis in relation to the UCPD.
In light of
the above, the Court ruled that Article 6a(1) and (2) of the PID must be
interpreted as requiring that a price reduction of a product announced by a
trader in the form of a percentage, or in the form of a promotional statement
intended to highlight the advantageous nature of the announced price, must be
determined on the basis of the ‘prior price’, within the meaning of 6a(2) PID.
The
judgment in case C-330/23 Aldi Süd is a
welcome ruling, clearing up the interpretation of Article 6a(1) and (2) PID. However,
as business practices evolve in response to regulatory changes, problematic price promotion
techniques are not expected to cease. The onus is then on enforcement
authorities to ensure application of the rules, thus achieving transparency of
price indications in consumer markets.
