Two years since the new rules on price indications entered into force, fake discounts are still a common and much-discussed topic. In recent years, the Netherlands Authority for Consumers and Markets (“ACM”) has increasingly taken enforcement action against traders that apply misleading discounts. Despite the new rules, we notice that the market is still largely in the dark as to what is and is not allowed when applying discounts. ACM is also aware of this.
ACM organised a meeting late last year to clarify the current rules on price indications. It also announced that it would soon be publishing guidelines to help companies with their discount policies. The latest developments in this area are addressed in this blog.
Legislation on discounts not yet clear
The new rules to combat fake discounts have been in force since 1 January 2023 and are set out in the Besluit prijsaanduiding producten (Products Price Indication Decree). The key rule regarding fake discounts is the 30-day rule. ACM defines this 30-day rule as follows: when a price is reduced, the discount price (the ‘for’ price) must always be compared with the lowest price that the trader charged for the product in question in the past 30 days (the ‘from’ price). Among other things, this rule is meant to prevent the price from being increased first and then artificially reduced. An explanation of the new rules can be found in our earlier blogs (see here and here).
Although this 30-day rule as such is fairly straightforward, there is still much ambiguity about ACM’s interpretation. When, for instance, does the Products Price Indication Decree apply, and when should the general ban on unfair commercial practices be applied? What are the rules on reference prices and other price comparisons? What exactly is meant by a progressive discount? Who is responsible for the 30-day rule when selling through a platform? One source of this regulatory ambiguity is the discrepancy between the interpretation of the price indication rules by the European Commission (the “Commission”) on the one hand and ACM on the other hand.
A common question is what conditions apply to other sales promotion practices (not being discounts), such as a price comparison with other companies or the mention of a reference price (e.g. a manufacturer’s recommended retail price). The guiding principle here is that it should be clear to consumers that such a comparison does not relate to a discount. So far so good. However, as the Commission states in its Unfair Commercial Practices Guidelines, a trader must also provide a directly visible textual explanation of the reference price in question. According to the Commission, a further explanation must be provided also when recommended retail prices are used.
But ACM’s website states that such a textual explanation is required only if a trader uses a reference price other than a recommended retail price. Moreover, the Commission expressly allows for the use of a crossed-out reference price (provided that an explanation is given), whereas ACM states that a reference price may in no event be crossed out if it is not the lowest price in the past 30 days. In sum, traders will benefit from clear guidelines on how the price indication rules are interpreted by ACM.
ACM clarifies the rules at a meeting
ACM organised a meeting on price indications on 7 November 2024. The purpose of the meeting was to discuss ‘new practices’ in the field of price indications and to answer any questions from traders. In our opinion, these are the key takeaways from the meeting:
- According to ACM, discounts should not last excessively long: in that case they no longer constitute discounts, but rather misleading commercial practices. According to ACM, what qualifies as excessively long greatly depends on the circumstances of the case and the type of product (such as seasonal products).
- A discount is no longer considered progressive (an exception to the 30-day rule) if (i) a product is temporarily removed from the website; or (ii) the progressive discount is briefly interrupted (for instance by a temporary price increase). Consecutive discount promotions (such as Black Friday and Cyber Monday) cannot be regarded as one progressive discount.
- A trader is not required to disclose the duration of a progressive discount, but that does help to avoid misleading consumers.
- In supervising traders, ACM will follow the line set out by the European Court of Justice in its Aldi Süd judgment. In other words, according to ACM, any form of discount (‘from-for’ price) must be based on the lowest price in the past 30 days (the ‘from’ price). It does not suffice to state the lowest price in the past 30 days in any other manner.
- Other reference prices (not being discounts) must always include an explanation directly visible to the consumer (not behind an ‘i’ sign) regarding the comparison being made (such as recommended retail price, average price or most-shown price). Contrary to what ACM states on its website, it has announced that the term ‘recommended retail price’ is insufficient: the traders must (briefly) explain what a recommended retail price is.
- Percentages, crossed-out prices, or the word ‘was’ may be used only in the case of discounts, not with other reference prices (such as a recommended retail price).
- Multiple price comparisons for one product are permitted, provided that the actual discount is clearly distinguishable from these price comparisons and the ‘picture as a whole’ is not misleading for consumers.
- When selling through a platform, the actual seller is ultimately responsible for compliance with the 30-day rule. According to ACM, however, the platform on which the products or services are sold has a duty of care to prevent consumers from being misled. It is unclear what is meant by this duty of care, but we can imagine that it includes the way in which the platform is set up, a clear statement of who the buyer is, and that the platform makes traders aware of the 30-day rule.
ACM also stated during the meeting that new guidelines are currently being developed within the Consumer Protection Cooperation Network (CPC) to further clarify the legislation on price indications. Some of the points addressed above will most likely be included in those guidelines. ACM has also conducted a survey in this context to ascertain how clear the legislation is among traders in the Netherlands. ACM has announced that it will soon publish a handout based on the meeting and the survey.
ACM takes enforcement seriously
In 2022 already, ACM signalled its intention to enforce stricter rules on misleading discounts. This was no empty threat: ACM has not remained idle since then. An overview of its enforcement actions on misleading discounts in recent years is provided below.
- In July 2022, Wish stopped using fake discounts after a joint investigation by ACM, the European Commission and other consumer authorities. According to the authorities, Wish used discounts relative to prices that it had most likely never charged.
- In November 2023, ACM announced it was investigating discounts by online sellers in the clothing, consumer electronics and bedding sectors. A large number of the companies investigated were found to be in violation of the discount rules. ACM announced its intention to take enforcement action.
- In June 2024, ACM imposed fines totalling €621,000 on five online shops for using fake discounts. The web shops involved were Day Traders (€163,000), Leen Bakker (€130,000), G-Star (€110,000), JYSK (€112,500) and Tommy Hilfiger (€105,500). Day Traders and Leen Bakker received higher fines for not acknowledging the violations. Four of the companies investigated were not fined. See also this blog in that regard.
- In October 2024, ACM warned companies against using fake discounts during Black Friday and the holiday season. ACM emphasised that traders are allowed to use discounts (‘from-for’ offers) only if they themselves have actually charged the ‘from’ price in the past 30 days.
- In November 2024, ACM called web shop Temu to account for using misleading commercial practices, including fake discounts. This too was a joint action with other European authorities.
Despite the lack of clarity about the rules, ACM is demonstrating that it will not shy away from taking enforcement action. If ACM publishes new guidelines in the near future – whether or not in cooperation with the CPC – we expect ACM’s supervision to intensify. Meanwhile, ACM is most likely already monitoring traders’ pricing policies.
Retailers are therefore well advised to align their discount policies with applicable laws and regulations. When in doubt about the interpretation of certain rules, our advice is to adopt a defensive strategy. ACM reiterated at the meeting that, as a rule, it will interpret the legislation in favour of consumers.
More information on consumer rules and our other blogs can be found at consumentenrecht.info
Information on dawn raids by ACM and the European Commission can be found at invalacm.nl
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