As the EU now modernises and tightens up consumer-protection rules with the 2019 issuance of the Omnibus or Modernisation Directive, which contains rules for the announcement of price reductions, the Dutch government has just published a draft proposal implementing these rules into Dutch legislation. In addition, the European Commission has also recently published a Guidance on the interpretation of the rules on announcements of price reductions.
The rules on the announcement of price reductions only apply to the sale of movable goods, and do not apply to the provision of services (e.g. digital services), or for the supply of digital content, such as the downloading of e-books.
The rules apply to offering price reductions of goods (e.g. in the form of a percentage discount), indicating a new lower price together with the original price (e.g. the price is now EUR 30, but was EUR 60). A message such as 'buy today without paying VAT' is also considered a price reduction and announcements such as 'Special Offers', 'Black Friday' or 'Cyber Monday' are also covered by these rules.
The rules, however, do not apply to claims, which advertise the offer by comparing it with a competitor's product without giving the impression that there is a price reduction (e.g. by using the slogan 'best/lowest prices'). Nor do the rules apply to loyalty programmes that bind customers by providing discount cards or offering discounts through the saving of points. Finally, the rules do not apply to real personalised offers (i.e. those that are genuinely personalised such as 'birthday discounts'). The rules do apply to personalised offers to all customers under the guise of personalised offers.
The original price from which the discount is deducted (i.e. the 'from price') must be the lowest price the trader has charged during the 30 days preceding the offer. The aim of this rule is to prevent traders from juggling prices and presenting fake price reductions. It should be clear how much discount consumers really get. Thus, the trader may not increase the price for a short period in order to decrease it afterwards and then present the old, lower, price as a significant price reduction.
For example, if a 50% discount is given and the lowest price over the previous 30 days was EUR 80, then EUR 80 must be stated as the lowest price on the basis of which the 50% discount is calculated, despite the fact that the last selling price was EUR 100.
The advertisements do not need to contain the previous price when there is a general statement such as "10% off everything". That is not feasible. However, the previous price must be stated at the point of sale, on the price tags or the price section in online shops.
Also, if the trader uses various sales channels (e.g. a physical shop and an online shop) and different prices, the lowest price used in the relevant sales channel must be stated.
The rules contain three exceptions where it is not necessary to state the last price the trader used 30 days prior to the offer. These include:
Perishable goods: products that spoil quickly or have a limited shelf life. The Dutch government limits this exception to goods with a 'use-by' date.
'New arrivals' goods: products that have been on the market for less than 30 days. The European Commission's explanatory memorandum offers two alternatives: setting a specific deadline for determining the 'previous' price, or allowing traders to set their own deadline. The Dutch government has chosen the latter option.
Progressive price reductions: incremental price reductions (e.g. first 20% off, then 30%, then 50%), which are common during clearance sales in the clothing industry. In this case, the previous price remains the original sale price, but the price must be reduced gradually and without interruption.
In the Netherlands, the Consumer and Market Authority (ACM) supervises the correct implementation of these rules. The protection of consumers is one of the ACM's main goals. As such, when the rules enter into force, the ACM will check whether traders properly apply price reduction and other rules introduced by the Modernisation Directive. Importantly, the Modernisation Directive will significantly increase the fine that the ACM can impose. Currently, the ACM can impose a fine of up to EUR 900,000 or 1% of the annual turnover: whichever is higher. In the future, the fine can be a maximum of 4% of the annual turnover or EUR 2 million.
The final implementation date of the Omnibus or Modernisation Directive is 28 May 2022. In the Netherlands, a draft version of the implementation of the European rules on price reduction announcements was published in December 2021. Anyone can comment on these rules until mid-January 2022. After comments have been processed, a bill will be submitted to the Lower House, although it remains to be seen whether the Netherlands will be able to meet the final implementation date. We will keep you informed on all developments.
For more information on consumer law in the Netherlands, contact your CMS client partner or local CMS experts.