Pricing carries a risk

In its decision the court interpreted the rule – which is also in force in Hungary – that when a price reduction is announced, the previous price applied by the retailer for a specified period before the price reduction must be indicated. “Previous price” means the lowest price used by the retailer during a period which mayn’t be shorter than 30 days prior to the announcement of the price reduction. The CJEU’s decision was based on a dispute in Germany. In the given case the legality of two types of price reduction notifications by a retail chain were reviewed, on the initiative of a consumer organisation in Baden-Württemberg. In one case three different prices were displayed next to the product, the reduced consumer price (highlighted) and the original consumer price crossed out. The communication also included the lowest price in 30 days (which was the same as the reduced consumer price) and the percentage of the price reduction (compared to the original consumer price).

Guest writer:
Dr. László Szűcs 
lawyer, law office member
Réti, Várszegi & Társai Law Office
PwC Legal

In the other case, the communication contained the same type of price information (i.e. the original price, the reduced consumer price and the lowest price in 30 days), but instead of the percentage of price reduction, the price was indicated as “very favourable”, plus a further difference was that the highlighted (reduced) consumer price was higher than the lowest price in 30 days. In the view of the consumer organisation that initiated the dispute, the communication of a price reduction where the price reduction wasn’t calculated on the basis of the lowest price in 30 days prior to the announcement of the price reduction was unfair. The CJEU accepted the position of the consumer organisation, so from now on if a price reduction is communicated, the lowest price in 30 days should be used as the basis for announcing and determining the price reduction. It also follows that a “reduced price” can’t be announced where the “reduced price” is equal to or higher than the lowest price applied in minimum 30 days preceding the announcement of the price reduction. //