This is important for any company that occasionally advertises a discount to consumers. Ever since the amended Price Display of Products Decree came into force in January 2023, it was unclear how to interpret the (then) new rules around discount communications. Is it sufficient if a price reduction announcement only mentions the "previous price" (i.e. the lowest selling price in the 30 days prior to the price reduction)? Or must this previous price also be the reference price (e.g. crossed-out price)? The ECJ provides clarity: when announcing a price reduction, the reduction must be based on the previous price.
Let me show you what this means in practice by referring to Aldi's leaflet offering bananas and pineapples, as this was the subject of discussion in the case before the Court of Justice.
What was the problem? According to the Modernisation Directive (which amended the Price Display Directive), when announcing a price reduction (communicating a discount), the lowest selling price in the 30 days preceding the price reduction (the "previous price") must be stated. Aldi thought to comply with this rule by quoting three different prices.
Concerning the bananas, Aldi mentions:
- Current retail price - EUR 1.29;
- last price (crossed out) - EUR 1.69;
- and the lowest price in the past 30 days (as a standalone listing) - EUR 1.29.
And concerning the pineapples, Aldi mentions Aldi:
- Current retail price - EUR 1.49;
- last price (crossed out) - EUR 1.69;
- and the lowest price in the past 30 days (as a standalone listing) - EUR 1.39.
According to the ECJ, this is not allowed. You cannot mention the "previous price" separately if the discount rate is not based on that price. What Aldi is doing is contrary to the purpose of the legislation: to protect consumers from 'fake discounts'.
This ruling has major implications for any EU retailer. So should Aldi have said "bananas from EUR 1.29 for EUR 1.29" and "pineapples from EUR 1.39 for EUR 1.49"? No, that leads to the bizarre situation where the current selling price is equal to or higher than the "previous price" and so there is actually no discount at all. What then? Aldi should simply not have advertised this discount.
Any trader should now review its pricing policies, especially for products that are on sale several times a month. Actions such as "2+1 free" may become more popular, as these are not price reductions that require mentioning the "previous price". Discounts within a loyalty programme (e.g. with a discount card) may also be an exception, as long as not all customers in reality can easily participate in them.
Any questions about discount offers? Let me hear them!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
