Price reduction announcements during holiday season and seasonal sales

The Belgian act of 8 May 2022 implementing the Omnibus Directive provides for an obligation to mention the “prior price” when announcing price reductions, such “prior price” being the lowest price applied during a 30 days’ period before the price reduction. In case of successive sales promotions typically applied during the holiday season and seasonal sales, the “prior price” to be mentioned when announcing a price reduction should take into account price actions already applied during prior (holiday) promotions. 

Belgian act implementing the Omnibus Directive

The Belgian government implemented the European Omnibus Directive (Directive (EU) 2019/2161) into Belgian law by means of the act of 8 May 2022 amending books I, VI and XV of the Belgian Code of Economic Law (the “CEL”).

The Omnibus Directive provides for a range of measures and changes modernising EU consumer law, reinforcing EU consumer rights and strengthening the enforcement of EU consumer protection rules. The most important changes relate to pre-contractual information obligations for online marketplaces, restrictions on the announcement of price reductions, the extension of the scope of consumer rights to digital content and digital services, an extension of the list of misleading practices and higher and tailormade penalties for infringements of consumer protection law.

Article 2 of the Omnibus Directive provides for certain restrictions on the announcement of price reductions, which have been implemented in article VI.18-VI.19 of the CEL.

Requirements for announcing price reductions

As a rule, any price reduction announcement for goods should indicate the prior price. The “prior price” that should be mentioned is the lowest price applied by the trader during a period not shorter than 30 days prior to the application of the price reduction.

The term ‘price reduction announcement’ is interpreted broadly and concerns any public promotional statement by a trader that it has reduced the price of its goods (e.g. “10% off”, “10% discount”, “EUR 10 off”, “now only EUR 20”, “no VAT”, etc.). The question whether the announcement indicates a measurable price reduction is irrelevant. Any announcement that creates the impression of a price reduction (even general announcements such as “sales”, “special offers”, “Black Friday” and “seasonal sales”) are to be considered ‘price reduction announcements’.

Loyalty programs and personalized price reductions do not fall within the scope of the abovementioned obligation, since they are (in principle) not publicly announced. General marketing claims (e.g. “lowest prices”) and other promotion techniques such as comparative advertising (e.g. “10% cheaper than”) are also not considered ‘price reduction announcements’, provided that they do not invoke the impression of a price reduction. Announcements that promote a ‘price advantage’, rather than a ‘price reduction’, are also not considered ‘price reduction announcements’ and are therefore not subject to the obligation to mention the prior price (e.g. “second product free”, “2+1 free”, “buy one, get two”, “30% off on second item”, etc.).

The obligation to mention the prior price applies both when a price reduction is announced for specific goods and when the price reduction is announced in a general manner (for a range of products of for all products). Furthermore, said obligation applies to price reduction announcements in all distribution channels (offline and online).

The obligation to mention the prior price only applies to price reduction announcements relating to movable goods (thus not to price reductions relating to immovable goods, digital content or digital services). Furthermore, goods which are liable to deteriorate or expire rapidly are expressly excluded from said obligation.

Examples:

• A retailer announces a 10% discount on a specific product, valid in January 2023. The normal unit price for the product was EUR 15, but the retailer increased the price to EUR 17 as from 12 December 2022. The “prior price” to be mentioned during the January 2023 campaign will be EUR 15 (thus resulting in a price of EUR 13.50 after the 10% discount).

• A retailer announces a 10% discount on a specific product, valid in January 2023. The normal unit price for the product was EUR 15, but the retailer already organised a sales campaign during the first week of December 2022 offering the product at a promotional price of EUR 13. The “prior price” to be mentioned during the January 2023 campaign will be EUR 13 (thus resulting in a price of EUR 11.70 after the 10% discount).

• A retailer announces a general 10% on all products. The general announcement as such does not need to mention the “prior price” (of all products). However, the prior price of each individual product must be mentioned in each relevant outlet.

• A retailer having physical stores and an online store announces a 10% discount on a specific product, only valid for online purchases in January 2023. The lowest price for the product in December 2022 was EUR 15 offline and EUR 13 online. The “prior price” to be mentioned for the January 2023 online campaign will be EUR 13 (thus resulting in a reduced price of EUR 11.70 after the 10% discount).

Article VI.19 of the CEL provides for a specific exception for progressive price reductions. When a price reduction is gradually increased during one sales campaign not exceeding 30 days, the “prior price” to be mentioned during the entire sales campaign will be the lowest price applied during a 30 days’ period before the first price reduction of the sales campaign (such prior price will thus remain the prior price for all subsequent price reductions of the same campaign). It should be noted that the sales campaign may not last longer than 30 days (otherwise, the “prior price” to be mentioned as from day 31 would be the price after discount as applicable on day 30 of the campaign). Also importantly, the exception for progressive price reductions only applies if the price reductions are part of one and the same sales campaign and are applied without interruption. In case of successive sales campaigns during a 30-day period (e.g. seasonal sales after Christmas promotions), the general rule to mention the “prior price” will apply to each individual sales campaign and each individual price reduction announcement. 

Impact on price reductions during holiday season and seasonal sales

The holiday season is traditionally a season of many promotions. A budgetconscious consumer considers sales promotions even more importantly this year.

Most retailers organise (or participate in) several and successive sales promotions during and after the holiday season (Black Friday, Cyber Monday, Christmas promotions, seasonal sales, etc.).

Especially during a promotion filled season, it is important to pay attention to the above restrictions regarding price reduction announcements. 

When announcing a price reduction in light of a Christmas sales promotion, one should take into account any price reductions already applied during a 30- days period before such Christmas sales promotion to determine the prior price (e.g. if a Christmas sales promotion is a 10% discount applicable between 17 and 31 December 2022 for a product having a standard unit price of EUR 15, but for which a 10% discount sales promotion was already organised between 23 and 30 November 2022 in light of Black Friday and Cyber Monday, the “prior price” to be mentioned for the Christmas sales promotion will be EUR 13.50). 

The obligation to mention the “prior price” will also apply to price discounts granted during the seasonal sales (“solden/soldes”) in January 2023. Hence, if price reductions were already granted in December 2022 for holiday promotions, the “prior price” to be mentioned during seasonal sales in January 2023 (in case of price reductions) will be the price after the discount applied in December 2022.