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Shopping Savvy: Karlsruhe Decides on Honest Price Advertising
Price discounts, sale promotions, and best price guarantees can be a store's trump card, but they need to play by the rules. Even the Federal Court of Justice (BGH) in Karlsruhe is currently looking into the intricacies of price advertising. Here's what you need to know about the dos and don'ts of price advertising, as seen through the eyes of the law.
Straightforward Pricing
When it comes to displaying prices, the Price Indication Ordinance sets the standard. It specifies that any product offered comes with a total price tag, including taxes and other charges. Also, sellers are required to provide the basic price, which means the price per unit of measurement, such as kilograms, liters, or square meters.
But when does a price reduction go awry? Trickery lies in the comparison of prices, as explained by Martin Jaschinski, a lawyer from the Berlin law firm JBB Rechtsanwälte. False original prices or a temporary price hike followed by a seemingly generous discount are examples of such tricks.
Comparing Apples to Apples
To tackle these issues, the European Union (EU) devised a Price Indication Directive, which Germany introduced in the Price Indication Ordinance. This directive dictates that any advertisement promoting a price reduction must disclose the lowest price a product was sold for in the 30 days preceding the price reduction, commonly known as the reference price.
Clear and Conspicuous
The Luxembourg Court of Justice recently shed some light on how the reference price should be presented. The ruling stated that percentage discounts and "price highlight" advertising statements must always refer to the reference price. It is not enough to mention the reference price in a footnote, but it should be the central focus of the advertisement.
The Netto Case
The Competition Authority filed a complaint against food retailer Netto Marken-Discount, citing misleading advertisements for a coffee product. Netto displayed the price of the previous week (6.99 €), the current price (4.44 €), and the percentage discount (-36%) but mentioned the reference price only in a footnote—the same as the current price. The Competition Authority believes Netto's advertisement is misleading, and the BGH has yet to issue its final ruling on the matter.
Impact on Competition
"We, consumers, look at the price first", says Reiner Münker, Managing Director of the Competition Authority. Any deception or manipulation of pricing information can disrupt fair competition, harm competitors, and eventually affect consumers.
Alternatives to Price Reductions
As a result of the ECJ's ruling, there has been a decline in price reduction advertisements and an increase in advertisements featuring recommended retail prices (RRP). Instead of comparing the price reduction with a previous price, the RRP recommended by the manufacturer to the retailer is used instead. However, it can be difficult for consumers to discern the difference between an RRP and a genuine price reduction. Moreover, the RRPs are often well above the actual selling prices, sparking ongoing debates over their legitimacy.
In essence, when it comes to price advertising, truth, transparency, and fairness are key. By understanding the principles and laws surrounding price advertising, consumers can make informed decisions and support businesses that uphold these standards. The BGH's ongoing deliberations further emphasize the significance of this topic in today's market.
- In the ongoing debate about honest price advertising, the Federal Court of Justice (BGH) in Karlsruhe is examining the intricacies of business pricing, focusing particularly on deceptive practices like inflating original prices before seemingly generous discounts.
- As more businesses in Germany turn to recommended retail prices (RRPs) following the European Court of Justice's ruling, consumers face challenges in differentiating RRPs from genuine price reductions. The transparency of these practices, therefore, becomes crucial for maintaining fair competition and ensuring that consumers make informed choices.
