Background: Price Advertising and Consumer Protection in the European Union
Price information, especially in the form of advertising with alleged price reductions, is a focus of regulatory requirements in the European Union. Both consumer and competition law set clear boundaries for advertisers to prevent deception and to ensure fair competition. Particularly relevant is the advertising practice of referencing a ‘previous’ price as a benchmark for supposedly discounted products. The decision of the European Court of Justice (Judgment of 29 June 2024, Case C-330/23) has again provided important clarification concerning transparency and fairness in price advertising.
Decision of the ECJ: Requirements for the Comparison of Prices
Facts of the case and referral questions
A trading company indicated a ‘discounted’ price in its advertising brochures compared to a ‘previous’ price. The price labeled as ‘previous’ did not always correspond to the last price charged; in some cases, the new advertised price was even at the same level or higher. A consumer protection organization challenged this and brought the case to the ECJ after exhausting national legal remedies. The central question was whether, within the European Union, an alleged advantage for consumers in price advertising must be objectively comprehensible, or whether a purely formal comparison of prices is sufficient.
Clear Requirements from the Court of Justice
The ECJ determined that an advertised ‘discounted’ price must in principle be lower than the price most recently demanded and actually charged by the retailer. Otherwise, consumers are misled into believing there is a price advantage that does not actually exist. Deliberately selecting an identical or even higher ‘previous’ price is therefore misleading and not compatible with the requirements of the Price Indication Directive (Directive (EU) 2019/2161 and Directive 2005/29/EC).
Relevant Legal Foundations
Unfair Commercial Practices and the Prohibition of Misleading Conduct
Under the Unfair Commercial Practices Directive (2005/29/EC), there is a strict prohibition throughout the European Union against any misleading actions toward consumers. Companies must ensure that all prices mentioned in business announcements are based on real, current market conditions. If a supposedly reduced price is advertised, the reference price must actually exist. Advertising with ‘fictitious prices’ clearly violates these requirements and carries significant legal risks such as injunctions or claims for damages.
Implementation in National Law and Practice
With the implementation of the Price Indication Directive—recently tightened by the Omnibus Directive—there is an obligation to always indicate the lowest price of the last 30 days as the previous comparison price (§§ 11 PAngV n.F.). These national regulations explicitly implement and specify the European requirements. Companies are required to structure their internal processes to ensure that only price advertising statements based on real and verifiable price data are made.
Impacts and Significance for Corporate Practice
Under Scrutiny: Permissibility of Price Advertising
The decision of the Court of Justice clarifies that price advertising with supposed discounts is under increased scrutiny and market participants are subject to ongoing review by competitors and consumer organizations. For companies, this means an increased risk of legal objections for incorrect or misleading price advertising, particularly in marketing and sales.
Considerations in a Cross-Border Context
For internationally active companies, it must also be noted that European requirements directly affect all member states. The requirements for price information and its transparency are harmonized across the Union. Unclear or misleading practices in one country can therefore have far-reaching consequences and reputation risks in European trade.
Next Steps and Open Questions
Note on Ongoing Proceedings and Interpretation
The current case law of the ECJ provides a binding standard but remains open with respect to specific individual situations within an overall assessment. In particular, the exact determination of the ‘immediately preceding’ price and possible exceptions still require examination and application by national courts. In practice, legal sensitivity is therefore required when preparing advertising campaigns or price adjustments.
Conclusion
The recent judgment of the European Court of Justice provides clarity for handling price advertising and defines uniform rules to protect consumers from purely fictitious discounts and misleading communication. Companies are well advised to continuously monitor their advertising practices for compliance with these requirements, as violations may have significant civil law and, under certain circumstances, supervisory law consequences.
Should further questions arise concerning the permissibility of price advertising, the implementation of current legal requirements, or risk assessment for price reductions, the Rechtsanwalt of MTR Legal are available for the evaluation of individual cases and the development of tailored solutions.
