How Price Indication Directive aka Omnibus Directive changes campaign pricing in the EU
Omnibus Directive introduces new changes to campaign pricing within the EU. Here you can find our interpretation on the implications for eCcommerce and retail pricing campaigns.
- In Finland, Omnibus Directive enters into force on January 1st 2023.
- In Sweden, the Omnibus Directive became applicable on September 1st 2022.
1. Introduction to Price Indication Directive
EU Directive 98/6/EC, more commonly known as the Price Indication Directive (‘PID’), establishes common rules for consumer protection in the indication of the prices of products offered to consumers. As stated in the preamble of the Directive, consumers must be guaranteed a high level of protection, and the information on prices ought to be precise, transparent as well as unambiguous. Although consumer protection is considered to be a crucial matter in the European Union and consumer protection laws should be applied effectively throughout the EU, the actual application of the European consumer protection policy has turned out to be challenging.
The comprehensive Fitness Check of consumer and marketing law carried out by the Commission in 2016 and 2017 in the framework of the Regulatory Fitness and Performance (‘REFIT’) programme concluded that the effectiveness of EU consumer protection laws was compromised by a lack of awareness among both traders and consumers. Furthermore, the findings of various EU-wide screenings (‘sweeps’) of over 500 e-shops selling clothing, footwear, furniture, household items and electric appliances revealed that the majority of the screened websites are not in compliance with the very basic EU consumer protection rules. The sweeps focused not merely on price transparency and drip pricing (2018) but on telecommunication and other digital services (2017), delivery and right of withdrawal (2019), consumer scams related to the COVID-19 pandemic (2020), misleading sustainability claims (2020), consumer credit (2021) and online consumer reviews (2021). This legal research paper highlights issues related to price indications and price reductions, therefore we will only look into the sweep from 2018.
1.1. Sweep on price transparency and drip pricing (2018)
In 2018, the networks of national consumer protection enforcement authorities (‘CPC authorities’) performed an EU-wide sweep of 560 e-commerce sites offering a variety of goods, services and digital content. The alarming results were published in February 2019 pointing out that around 60% of the sweeped websites showed irregularities and were not in compliance with EU consumer rules. These irregularities mainly concerned how prices and special offers were presented. In addition, for more than 31% of the sweeped websites offering discounts, the CPC authorities were suspicious of the authenticity of special offers and the way the discounted price was calculated. For example, some businesses have been in the habit of increasing prices right before the announcement of a price reduction or a specific pricing campaign in order to make the offered discount seem more attractive to the consumer. Such price manipulation practices cause uncertainty to the consumer about the actual price of the good, and in many cases, can potentially lead to infringements of EU consumer protection laws.
1.2. Road to the adoption of the Omnibus Directive
The drastic increase of e-commerce services (especially B2C) and the results of both the 2018 sweep as well as the Fitness Check of consumer and marketing laws demonstrated the need to strengthen, expand and harmonize the scope of consumer protection regulations across EU Member States (‘EU MS’). Therefore, EU authorities had to face the harsh reality of the urgency to modernize the scattered regulations of consumer protection laws. On 27 November 2019, the European Parliament and the Council adopted the Enforcement and Modernization Directive 2019/2161, also known as the Omnibus Directive. EU MS had to adopt the Directive by 28 November 2021, and the new provisions will enter into force on 28 May 2022.
The Omnibus Directive, which is also part of the EU’s New Deal for Consumer legislative package, introduces amendments to four EU consumer protection directives:
- Consumer Rights Directive (2011/83/EU)
- Price Indication Directive (98/6/EU)
- Unfair Contract Terms Directive (93/13/EEC)
- Unfair Commercial Practices Directive (2005/29/EC)
In a nutshell, the aim of these amendments is to harmonize the application of contract rules in the EU, improve consumer protection measures, apply more consistent sanctions for infringements of consumer rights and to increase transparency in online marketplaces.
When paying attention to pricing, the Omnibus Directive amends the Price Indication Directive by adding specific rules on price reduction announcements, namely Article 6a. Furthermore, the current Article 8 on applicable penalties is amended by the Omnibus Directive.
Although not falling under the scope of Article 6a of the Price Indication Directive, it is noteworthy to mention that the Omnibus Directive adds a new of Article 6(1)(ea) to the Consumer Rights Directive that requires traders to inform consumers about the fact in case the price was personalized on the basis of automated decision-making in case of distance and off-premises contracts (‘personalized pricing’).
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1.3. Guidance on the Price Indication Directive
On 29 December 2021, the European Commission adopted a Commission Notice to provide guidance on how the new provisions on the announcements of price reductions ought to be interpreted and applied. Currently, this is the only official document providing guidance on the interpretation and applicability of Article 6a of the Price Indication Directive. The new Article 6a of PID focuses on the issue of transparency of price reduction announcements. The main aim of the Article is to prevent traders from artificially inflating the reference price and/or misleading consumers about the amount of the discount. From the point of view of customers, the Article increases transparency when a price reduction is announced. The new provision on price reduction also enables the enforcement and market surveillance authorities to more easily control the fairness of price reductions, as it sets clear rules on the reference ‘prior’ price on which the announced reduction must be based.
2. Applicability of Article 6a of the Price Indication Directive
Article 6a applies to goods which are defined as movable goods under the provisions of EU consumer law. This means that Article 6a or the Price Indication Directive are not applicable to services or to digital content. Article 6a is applicable to price reduction announcements in all distribution channels (e.g. online marketplaces, brick and mortar shops). Article 6a applies to the following price reduction announcements:
- Promotional statements by the seller informing that the charged price for the good(s) has decreased. Such an announcement of price reduction can be done for example in terms of percentage or specific amount, by indicating a new lower price together with the indication of the previously applied higher price, or by any other promotional technique.
- Price reduction announcements of a specific good(s) in the trader’s offer.
- Price reduction announcements made by a general price reduction announcement.
- Price reduction announcements where goods are sold in bulk and the selling price is determined only after the consumer indicates how much of the good(s) is required. In these cases, the price reduction announcement concerns the (prior) unit price.
- Situations where a price reduction announcement does not indicate a measurable price reduction but creates the impression of a price reduction. Examples of these situations include announcements like ‘sales’ price, ‘special offers’ or ‘Black Friday offers’ as they suggest the application of a price reduction. The prior price must be indicated for the goods included in the announcement.
2.1. Situations outside the scope of Article 6a
Article 6a does not restrict price fluctuations and price decreases that do not involve a price reduction announcement. Therefore, long-term arrangements that allow the consumers to benefit from reduced prices and specific individual price reductions are not covered by Article 6a. General marketing claims that promote the seller’s offer by comparing it with other sellers’ offers without invoking or creating the impression of a price reduction, such as ‘best / lowest prices’, and other techniques of promoting price advantages that are not price reductions (price comparisons and tied conditional offers) fall outside the scope of Article 6a. These practices are covered by the Unfair Commercial Practices Directive (‘UCPD’).
3. Traders affected by the Omnibus Directive
The Price Indication Directive applies to traders, defined in Article 2(d) as ‘any natural or legal person who sells or offers for sale products which fall within their commercial or professional activity’. The new Article 6a therefore applies to the trader who is the actual party in the contract with the consumer, i.e. to the seller of the goods, including sellers using intermediaries, in particular online marketplaces.
Article 6a applies also to traders based outside the EU that direct their sales to EU consumers, including to traders offering goods via platforms. The applicability of the PID to non-EU traders is regulated by Articles 6(1) and 6(4) of the Rome II Regulation. This regulation is applicable in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters.
3.1. Traders outside the scope of the Omnibus Directive
Article 6a does not apply to the intermediaries that provide the mere means for traders to sell their products, such as online marketplaces, or that merely aggregate and display information about the prices provided by other sellers (‘price comparison platforms’). These intermediaries remain subject to the general rules on intermediary liability and professional diligence obligations. The intermediary becomes a subject to the PID rules when they are the actual seller of the goods or when they sell on behalf of another trader.
Article 6a is not applicable to ‘cash-back’ announcements whereby third parties, which are not sellers of the goods, such as manufacturers / distributors, promise the consumers who have purchased the good(s) in question, to refund part of the price paid, at the consumers’ individual request and during a certain period. Such cash-back practices are regulated by the UCPD and must not be used to circumvent the requirements of the PID for price reduction announcements.
4. Legal interpretation of Article 6a of the Price Indication Directive
The requirements of the new Article 6a of the Price Indication Directive are the following:
1. 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.
2. 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.
3. Member States may provide for different rules for goods which are liable to deteriorate or expire rapidly.
4. Where the product has been on the market for less than 30 days, Member States may also provide for a shorter period of time than the period specified in paragraph 2.
5. Member States may provide that, when the price reduction is progressively increased, the prior price is the price without the price reduction before the first application of the price reduction.
4.1. Indication of the ‘prior’ price
As a general rule, MS may not provide for a shorter period than 30 days for establishing the prior price. Exceptions to this rule are covered by the regulatory choices referred to in paras. 3 to 5 of Article 6a. The reason behind a reference period of at least 30 days is to prevent traders from juggling with prices and presenting fake price reductions. For example, increasing the price of a good for a short period of time in order to decrease it afterwards by presenting a price reduction misleads consumers about the actual price of the good. The 30-day period for setting the reference prior price ensures that the reference price is real and not merely a marketing tool to make the reduction seem more attractive.
It is possible for traders to indicate as the prior price the lowest price applied during a longer period of time than 30 days. This kind of practice is not prohibited in the second paragraph of Article 6a. It will not be contrary to the requirements laid out in Article 6a if the prior price indicated is lower than the lowest price in the 30 days immediately preceding the price reduction announcement. If a MS requires a longer period than 30 days in order to establish the prior price, the compliance of this approach must be assessed with EU law. As stated in Article 10 of the PID, Member States can adopt or maintain provisions which are more favorable as regards consumer protection and comparison of prices, without prejudice to the MS obligations under the Treaty on the Functioning of the European Union (‘TFEU’).
When a trader announces a price reduction, they must identify the lowest price they charged for the respective good(s) during at least the last 30 days before the application of the price reduction. This lowest price includes any previous reduced price during that period. Failure to take into account the prices applied during any previous promotional periods in the 30 days before the price reduction announcement will be contrary to Article 6a of the PID.
The same rule is applied where a trader initially presents the price reduction by referring to a forthcoming increased price, then applies the increased price for less than 30 days and then announces a price reduction. Regardless of how the price reduction was marketed, the prior price for the subsequent price reduction still must be the lowest price in the last 30 days, i.e. the initial starting price.
The price reduction must be presented using the indicated prior price as reference, i.e. any indicated percentage reduction must be based on the prior price as established in the general rule of Article 6a.
Where the price reduction announcement is ‘40 % off’ and the lowest price in the previous 30 days was EUR 100, the seller will have to present EUR 100 as the ‘prior’ price from which the 40 % reduction is calculated, even if the last selling price was EUR 160.
Article 6a allows the seller to indicate other reference prices when announcing the price reduction, provided that the additional reference prices are clearly explained, do not create confusion and do not detract the consumer’s attention from the indication of the prior price.
A trader that practices price reductions more often than once every 30 days could additionally inform the consumer about its other previous prices as follows:
‘20 % off from [starting date] to [end date]: EUR 80 instead of EUR 100, our lowest price in the past 30 days. Our regular price, outside promotional periods, during the past 30 (or 100 days etc.) was EUR 120’
In general, the manner in which any such other reference prices are presented and calculated are subject to the UCPD. In this respect, traders must always ensure that it is clear to the consumer what the other indicated reference prices represent.
Article 6a does not require traders to indicate for how long they have applied the indicated prior price and does not affect the duration of the price reduction campaigns. It simply requires traders to indicate the prior price at the start of each price reduction, and they can keep it throughout the entire period of the price reduction. Traders may announce a price reduction for the good(s) over a longer time-period, including for more than 30 days. Also, where the price reduction lasts longer than 30 days without interruption, the prior price to be indicated remains the lowest price applied during at least 30 days before the price reduction (progressive price reductions).
If a trader sells good(s) through different sales channels/points of sale (e.g. different online shops) at different prices and those different sales channels/points of sale are the object of a general announcement of a price reduction, the trader must indicate, as prior price for the relevant good(s) in each sales channel/point of sale, the lowest price that they applied in that respective sales channel/point of sale during at least the period of 30 last days. If misleading price reduction announcements create the impression that the reduction is applied in all the sales channels/points of sale but only some of the sales channels/points of sales are subject to the price reduction, these cases are assessed according to the rules of the UCPD.
Traders can expand a price reduction campaign as long as consumers are clearly informed that it is an extension and not a new price reduction campaign and the overall presentation of the campaign is not susceptible to create false impression on consumers.
4.2. General price reduction announcements
Article 6a does not prohibit traders from announcing price reductions in a general manner, for example:
- ’20 % off on everything today’ or
- ’20 % off on all Christmas decorations this week’
If a price reduction is announced by a general statement, e.g. a physical banner or online communication, the prior price does not have to be indicated on the same medium as the price reduction announcement itself. Instead, the prior price for the individual goods covered by the announcement must be indicated at the point of sale, i.e. on the respective price sections in online shop interfaces.
A trader may also announce a general price reduction providing different discounts for different categories of goods. In these cases, the trader must clearly identify the categories of goods concerned and their respective price reduction, for example:
- ’30 % off on goods with a blue dot and 40 % off on goods with red dot’
Regarding the indication of the prior price for the individual goods covered by the general reduction announcement, two cases must be distinguished:
Where in the past 30 days, the trader has not increased the price of the individual goods covered by the general announcements and has not organized other (general) price reductions during that period.
In this case, the prior price for the purposes of Article 6a will be the previously applied selling price of the goods, i.e. the price already indicated on the price tag or in the price section of the online shop interface. Accordingly, the trader will not need to change the price tags/online information for the goods concerned due to the application of Article 6a of the PID.
Where the trader has increased the price or has organized another (general) price reduction in the last 30 days, the selling price online will not qualify as prior price as it will not be the lowest price in the past 30 days as required by Article 6a.
In this case, the trader will therefore have to adjust the relevant online price indication of the good covered by the general price reduction announcement to indicate the correct prior price for those goods.
Article 6a does not prohibit group advertising of price reductions where central entities plan and advertise price reduction campaigns on behalf of the sellers (retailers) that distribute their products. Where such central entity announces price reductions on behalf of its members, they must ensure that the participating retailers are in a position to comply with the requirements regarding price reductions. In other words, they must enable the participating retailers to respect the rules on indicating the prior price. Each participating retailer remains responsible for ensuring that the relevant goods that they sell in the context of the price reduction campaign have the correct prior prices.
Where the participating retailer has kept its prices stable during the past 30 days before the announcement of the reduction, there is no need to adjust the individual prior prices as the previous selling price constitutes the prior price for the purposes of Article 6a. Should it not be the case for certain goods covered by the general pricing campaign, the seller must adjust the prior price for the goods concerned. This involves cases where price reduction campaigns launched by the respective seller (retailer) for its own goods are followed within less than 30 days by campaigns launched by the central entity. In such cases, in order to determine the prior price, the individual retailer concerned must take into account the reduced price in the previous campaign(s).
4.3. Loyalty programmes and personalized price reductions
Article 6a is applicable to those price reductions, which are offered/announced to consumers in general, although presented as personalized. As an example, the trader makes available vouchers or discount codes to potentially all consumers visiting the online shop during specific periods by announcing campaigns like:
- ‘Today 20 % off when using the code ABC’
- ‘This weekend 20 % off on everything for loyalty members only’
If the code or loyalty programme is accessible or used by many (or majority of customers), the trader must comply with the requirements laid out in Article 6a, i.e. ensure that the prior price for all the goods concerned is their lowest publicly available price in the last 30 days.
Article 6a is not applicable to the customer loyalty programmes of the seller (discount cards or vouchers), which entitle the consumer to a price discount on all the products of the seller or on identified product ranges during extended continuous periods (for example 6 months, 1 year) or which allow accumulation of credits (points) for future purchases.
Furthermore, Article 6a is not applicable to real personalized price reductions that do not have the nature of announcing the price reduction. A typical example of such price reductions are those that result from the consumer’s prior purchases with the seller concerned, such as when the consumer receives a ’20 % off’ voucher upon the purchase, valid for the next purchase until the end of the month. Other examples of real personalized price reductions falling outside the scope of Article 6a are reductions granted on special occasions for that consumer (e.g. marriage or birthday of the consumer) and reductions applied at the time of the purchase that have not been announced in advance. Loyalty programmes and personalized offers continue to be assessed under the UCPD (see sections 2.8.2. and 4.2.8. of the Guidance on the UCPD).
5. Derogations from the general rule
Paras. 3 to 5 of Article 6a offer Member States the possibility to derogate from the general rule on price reductions in three cases: (1) goods which deteriorate or expire rapidly (‘perishable goods’), (2) goods which have been on the market for less than 30 days (‘new arrivals’ goods) and progressive price reductions.
5.1. Perishable goods
This option allows the MS to provide for different rules for goods that deteriorate or expire rapidly. Such rules may even completely exempt such goods from the scope of Article 6a or allow the seller to indicate as prior price the last price immediately before the price reduction.
When referring to goods which deteriorate or expire rapidly, there may be a valid reason to apply a discounted price more often on such goods in order to sell them faster due to approaching expiration dates. To determine whether a good meets the objective criteria of being liable to deteriorate or expire rapidly, this must be assessed on a case-by-case basis but normally these goods refer to fresh food and drinks with short expiry time limits. The possibility for MS to derogate from the general rule on price reductions cannot be applied to goods that are not perishable because of their physical composition and properties but only expire in the commercial sense (for example seasonal clothing).
5.2. ‘New arrivals’ goods
This option enables MS to allow price reduction announcements also in respect of goods that the trader has been selling for less than 30 days before the announcement of the price reduction. The option is formulated broadly and refers only to a shorter period of time than the default period of at least 30 days. It cannot be interpreted as also including the possibility of complete exemption of these goods from the requirement to observe a reference period for establishing the prior price. There are two possible approaches to apply this option:
Where MS choose to apply this option, they must set out a specific period of time for the determination of the prior price.
Alternatively, it is possible that the MS leave it for the traders to determine the period of time by themselves and to indicate this period along with the corresponding prior price. If the specific reference period is not established by national rules, the fairness of the price reduction announcements for the goods in question continue to be assessed on a case-by-case basis under the UCPD.
Goods are considered as having already been on the market where the seller resumes the offer of the same goods after a period of interruption (e.g. temporarily out of stock or seasonal goods). In this case, such goods are not strictly speaking new arrivals, and thus fall outside the scope of the exception provided in Article 6a. However, in these situations, the trader can choose, as a reference period for setting the prior price, a longer period of time during which the good was offered for sale for a total of at least 30 days. If the seller offers a good for sale after a period of interruption, the seller can announce a price reduction indicating as the prior price the lowest price applied in the reference period before the interruption provided that:
- the good has been offered for sale for a total at least for 30 days during that reference period; and
- the prior price indicated is the lowest price in the whole reference period.
Subject to a case-by-case assessment and being compliant with Article 7 of the UCPD, the trader may be required to inform the consumer when the indicated prior price is a price that was applied not in the period immediately preceding the price reduction but for example in the previous season.
5.3. Progressive price reductions
This option becomes applicable when the price is gradually reduced, without interruptions, during the same sales campaign. In this case, the prior price is the lowest price during the 30 days before the application of the first price reduction announcement, and it remains the prior price for all subsequent price reduction announcements during the sales campaign.
The lowest price of the good for the last 30 days before the sales campaign started was EUR 100. The seller indicates EUR 100 as its prior price when it announces the first price reduction of 10 % off and can then keep the same prior price also when announcing the following 20 % and 30 % reductions.
The situation is different in the cases of successive sales campaigns during a 30-day period (for example promotions such as ‘15 % off every Sunday in December’ or during successive ‘Black Friday’ or Christmas sales campaigns in November/December). In the context of successive sales campaigns where the price is increased in short periods, the general rule of Article 6a is applicable, and the prior price for each successive price reduction is the lowest price during at least the past 30 days (including the reduced price during the previous promotions).
To avoid a circumvention of paras. 1 and 2 of Article 6a, para. 5 ought to be interpreted narrowly, keeping in mind it is applied only when the price is reduced progressively, without interruptions and without increasing the indicated prior price in the course of the continuous price reduction.
6. Interplay between PID and UCPD
Article 3(4) of the UCPD provides that in the case of a conflict between provisions of the UCPD and other rules of EU law regulating specific aspects of unfair commercial practices, the latter prevails and applies to those specific aspects. Therefore, insofar as Article 6a of the PID (lex specialis) introduces a specific set of rules regarding the definition and indication of the prior price when announcing a price reduction, it prevails over the UCPD regarding those aspects of price reduction that are governed by those specific rules.
The correctness of the prior price indicated by the seller and of the corresponding price reduction must be assessed against the specific requirements of Article 6a of the PID. However, this does not preclude the national enforcement authorities from also applying the UCPD to the practices of traders that infringe Article 6a of the PID when they also constitute unfair practices prohibited under the UCPD, in particular misleading actions in relation to the existence of specific price advantage within the meaning of Article 6(1)(d) of the UCPD.
Moreover, as stated in Section 1.2.5 of the Guidance on the UCPD, the UCPD and in particular Article 6(1)(d) on the misleading claims about the existence of price advantage remains applicable to other aspects of price reductions. The UCPD could become applicable to different misleading aspects of price reduction practices, such as:
- Excessively long periods during which price reductions apply compared to the period during which the goods are sold at a price without price reduction
- Advertising a reduction of, for example, ‘up to 65 % off’ when only a few of the items are reduced by 65 % and the rest are reduced at a significantly lower percentage
It is noteworthy to mention that apart from price reductions, a seller may use other types of practices promoting price advantages, such as:
- Comparison with other prices, e.g. prices of other traders or the manufacturer’s recommended retail price
- Combined or tied conditional offers, e.g. ‘buy one, get two’ or ’30 % off when buying three’
Such promotional practices are outside the scope of Article 6a of the PID but remain fully subject to UCPD.
A seller may also combine price comparison with a price reduction announcement regulated by Article 6a of the PID. As stated in section 2.8.2 of the UCPD Guidance, a seller who presents a price comparison must pay utmost attention to ensure that the average consumer does not perceive the comparison with, e.g. the recommended retail price, as a price reduction. If the price comparison is perceived by an average consumer as a price reduction because of its misleading presentation, this can amount to the breach of both the UPCD and Article 6a of the PID.
7. What happens in case of non-compliance with the PID?
As stated in the amended Article 8 of the Price Indication Directive, Member States shall lay down the rules on penalties applicable to infringements of national provisions adopted pursuant to the Directive and shall take all measures necessary to ensure that they are implemented. The penalties provided for shall be effective, proportionate and dissuasive. Furthermore, MS shall ensure that the following non-exhaustive and indicative criteria are taken into account for the imposition of penalties, where appropriate:
- 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 MS in cross-border cases where information about such penalties is available through the mechanism established by EU Regulation 2017/2394;
- any other aggravating or mitigating factors applicable to the circumstances of the case.
Thus, the amended Article provides MS for a rather detailed criteria on the imposition of penalties in case of infringements of the Price Indication Directive. Because of the interplay with the PID and UCPD, some infringements may also fall under the provisions of the UCPD. In this case, we refer to penalties stated in Article 13 of the UCPD, which are more severe. To give an overview, maximum fines can reach at least 4 % of the annual turnover of the trader in the MS concerned. If no information is available on the annual turnover of the trader, MS shall introduce the possibility to impose fines and the maximum amount shall be at least EUR 2 million. The aim of these increased fines is to ensure that the requirements of the Omnibus Directive are taken seriously.
8. Country specific approaches
As paras. 3 to 5 of Article 6a offer MS the possibility to derogate from the general rule on price reductions, one should take into consideration the different approaches MS have established. Here we focus on the leeway given to MS and introduce a few country specific rules applicable to perishable goods, new arrivals goods and progressive price reductions.
According to the Government proposal (HE 14/2022 vp),9 the general rule on price reduction announcements specifies that the trader must indicate the lowest price at which the good in question has been marketed during a period of 30 days before the commencement of the price reduction. Furthermore, Finland will apply different rules for goods that deteriorate or expire rapidly (i.e. perishable goods). The amended legislation introduces a new paragraph, which states that the general rule on price reductions is not applicable to perishable goods (Chapter 2, Article 11, par. 2 of the Consumer Protection Act).
Sales campaign that lasts for no longer than 60 days and in which the price reduction is progressively increased, the ‘prior’ price shall be indicated as the lowest price during the 30 days period of time before the application of the first price reduction announcement. In other words, there is no need to update the ‘prior’ price in the middle of the sales campaign as it remains the same for all subsequent price reduction announcements during the same campaign. The amended provisions will enter into force on 1 January 2023.
The Government submitted its proposal (2021/22:174) to the Parliament on 17 March 2022.1 The amended legislation introduces a new paragraph on price indication and specifies that in case of a price reduction, the previous price must also be indicated. The previous price to be indicated is the lowest price for which the good has been marketed for during the last 30 days before the announcement of the price reduction. If the price of the good has gradually decreased during this time, the trader must indicate the prior price before the application of the first price reduction. These rules are not applicable for goods which deteriorate rapidly or become too old (for example food and plants). As stated in the Government Proposal, the amended law entered was planned to enter into force on 1 July 2022. Due to delays, it entered into force on 1 September 2022.
The Ministry of Children and Family Affairs submitted a proposal for the implementation of the Omnibus Directive into Norwegian law already in November 2020. Although the rules were to enter into force no later than on 28 May 2022, the implementation of the Omnibus Directive has been delayed. The Ministry is currently working on a proposal on the final implementation rules, which is expected to be completed by the end of 2022.
According to the proposal, the explicit rule on the use of ‘prior’ price in marketing will require providing information on the actual ‘prior’ price (original price) when the product is marketed at a discounted price, and specify that the general rule refers to the lowest price the product has been available to the public for a period of six consecutive weeks prior to the price reduction. This proposed 6-week period of time for the determination of the actual ‘prior’ price is thus stricter than the required 30 days period of time established by the Omnibus Directive. As explained in Chapter 6.1., national rules that go beyond the requirements of the directive must be favorable as regards consumer information and comparison of prices. Thus, the proposal is in accordance with this requirement as it enhances transparency of price indication and strengthens consumer protection rules at a national level.
Furthermore, the proposal includes derogations from the general rule. When considering perishable goods and seasonal goods, the original ‘prior’ price is considered to be the marketed price right before the price reduction. Rapidly expirable goods are to be defined as goods that would expire within six weeks whereas seasonal goods are to be defined as goods with less than six weeks shelf life. If price reduction is progressively increased within the same sales campaign, the prior price to be indicated is the lowest price the good has been sold during the 6-week period of time before the commencement of the sales campaign.
The implementation of the Omnibus Directive into Danish law took place in December 2021 by the Competition and Consumer Authority. The rules entered into force on 28 May 2022 as required by the Omnibus Directive. The amended legislation requires that when a price reduction is announced, the trader must indicate the lowest price the good has been for sale during the last 30 days before the announcement of the price reduction. As for goods which deteriorate or expire rapidly, the trader must indicate the lowest price as the price the good was sold during the last 14 days before the price reduction. In case of subsequent price reduction announcements during the sales campaign (i.e. progressive price reductions), the prior price is to be considered the lowest price the good was marketed before the first price reduction.
The implementation of the European Omnibus Directive into Belgian law was finalised in May 2022, and the enhanced consumer protection rules entered into force on 28 May 2022.
As the general rule of Article 6a of the PID is applicable, the Belgian law further elaborates that the prior price must be separately determined per sales channel even if the same product is sold via different channels. Furthermore, it is noteworthy to mention that the Belgium chose to establish a specific period of time for the determination of the prior price for products that have been on the market for less than 30 days (new arrivals goods). In these cases, the reference price is the lowest price applied during a period of not less than seven days prior to the (first) price reduction announcement.
The rules on the determination of the prior price for goods that deteriorate rapidly or have a a limited shelf life are not applicable as provided in Article 6a(3) of the PID.
The required amendments to the Latvian Regulation No. 178 on Procedures for Indication of Prices of Products and Services took place in December 2021.14 The following rules will entered into force on 28 May 2022. Where a sale, price reduction or rebate is announced, the original price applied by the seller during the period preceding the application of the price reduction and the price after the reduction shall be clearly indicated. The starting price shall be the lowest price offered by the seller to each consumer during the 30 days preceding the reduction or rebate. Where a sale, price reduction or rebate is announced with general price reduction notices covering a wide range of products or a specific group of consumers, the initial price shall be clearly indicated but the price need not be indicated after it has been reduced.
In the case of a sale, price reduction or rebate, the original price need not be indicated for perishable or expiring goods. In that case, the price after the reduction shall be clearly indicated. Latvia chose to derogate from the general rule of Article 6a when it comes to new arrivals goods. The national law states that if the goods have been on sale at a particular point of sale for less than 30 days, the original price shall be the lowest price charged by the seller during the last seven days before the reduction or rebate. As for progressive price reductions, a subsequent price reduction is allowed as part of the sales campaign, provided that each price reduction announcement indicates the original (non-discounted) price that existed before the application of the first price reduction.
The Omnibus Directive unifies and modernises the existing EU consumer protection legislation. Consumers are given the long-waited opportunity to exercise their consumer rights more broadly whereas businesses are required to follow a strict set of rules to ensure increased transparency in marketplaces. This legal research paper highlighted the changes made to the enhancement of transparency of price reduction practices, and focused on the specific rules on the determination of the prior price of the good. Although the general rule of the new Article 6a of the EU Price Indication Directive requires traders, who announce a discount, to indicate the lowest price of the good that has been applicable in the last 30 days, the provisions of the Omnibus Directive do offer MS a bit of freedom in case of perishable goods, new arrivals goods and progressive price reductions. For example, some MS have chosen to apply even stricter rules than required by the Directive. The Omnibus Directive entered into force on 28 May 2022 in majority of the EU Member States and it will be fascinating to observe how traders have prepared for the new requirements, keeping in mind the rather severe penalties in case of non-compliance with the rules. Furthermore, we are eager to see how the courts will interpret the provisions of the Omnibus Directive.
Omnibus Pricing Compliance App for Shopify
The EU Omnibus Directive requires retailers to show the 30-day lowest regular price alongside the discounted price for all discounted products.
Omnibus Pricing Calculator is an easy to use solution to keep your prices in line with the new legislation.