An amendment to the Economic Law Code with new rules on announcing price reductions to consumers was published on 2 June 2022 in the Belgian Official Gazette. From now on, when a company announces a price reduction for goods it sells to consumers, it must explicitly indicate the “reference price”. The reference price is the lowest price applied during a 30-day period prior to the application of the price reduction.
The aim of the legislator is to prevent companies from juggling prices vis-à-vis consumers by, for example, raising them for a short period, only to lower them afterwards and present them as (significantly) reduced.
A similar rule existed in Belgium before 2014, but it was abolished after the European Court of Justice found it to be contrary to the Unfair Commercial Practices Directive.
In 2019, the European legislator decided to introduce a similar rule for consumer protection in all Member States through a new directive, called the Omnibus Directive (2019/2161). This rule has now been incorporated into the Economic Law Code.
The new “reference price rule” applies to all sectors that communicate discounts on prices to consumers. These would include the retail sector (supermarkets, clothing, etc.), but also sales to consumers of, for example, building materials, cars or food supplements.
It applies to both physical and online sales and must be applied per sales channel. This means that if a product is sold both in a brick-and-mortar shop and via a web shop, the reference price could differ per channel if a different lowest price has been applied in the previous 30 days in the shop and online respectively.
The new regime applies only to sales of movable goods to consumers. Services and digital content are out of scope, as are B2B sales.
An announced price reduction must be in play. The mere application of price reductions which have not been made known to the customer in advance (e.g. whisper discounts at the cash desk) are not covered by the rule.
Announcements of price reductions relative to competitors’ prices (price comparison with competitors) or compared to suppliers’ recommended prices also fall outside the scope. After all, these are not reductions compared to the seller’s own prices. Quantity discounts (e.g. “-50% when you buy two or more”) and tied sales are also not subject to the rule.
Superficial communications such as “promo”, “lowest prices”, “round prices” or “best prices” are not covered by the rule, although the rules on comparative advertising must always be taken into account.
The general prohibition on unfair commercial practices also remains unaffected. For example, an excessively long period of price reduction compared to a very short period during which the goods were sold at an unreduced price, may still constitute a prohibited misleading commercial practice in certain concrete circumstances.
In principle, general discount cards, vouchers or loyalty programmes do not require the reference price to be mentioned. These include, for example, a voucher that entitles a consumer to a price discount on all products or on a particular product range on their next visit, or a card that allows credits to be accumulated for future purchases.
If you announce the price reduction in general terms – for example, “30% off on everything”, “10% off on all kitchen utensils” or “-20% for all products with a blue sticker” on a banner at the shop entrance, in a leaflet or on the homepage of the website – then it is sufficient to indicate the reference price on the individual goods, e.g. on the price label on each product in the shop or on the price section of the product in the webshop.
A reference price need not be given for rapidly perishable goods or goods with a short shelf life. Further guidance on what “(rapidly) perishable” means is not given in the act, so a case-by-case assessment is needed.
Different, less stringent, rules exist for new arrivals and goods that are progressively discounted over a continuous period.
Multiple reference prices in one announcement?
An interesting question that arises with the new act is whether it is possible to mention other (prior) prices in addition to the legal reference price (the lowest price in the past 30 days), against which the discount or price difference is also reflected. For example, an applicable price of EUR 8 could be 20% lower than the legal reference price of EUR 10 (the lowest in the past 30 days), but at the same time 50% lower than the price of EUR 16 applied in the past week.
According to the new rule, if the company wishes to announce the discount in this example, it must in any case indicate the reference price of EUR 10. Based on the parliamentary preparation, it might be considered that the announcement is only allowed to refer to the legal reference price, but the European Commission has explained in guidelines that the simultaneous indication of reference prices other than the legal reference price should indeed be possible, provided they are clearly explained and calculated, and do not distract consumers’ attention from the legal reference price.
In discount campaigns, it will be important to check compliance with the new rules. The rules apply as from 28 May 2022.