Shedding Light on Price Discounts: The Federal Court of Justice Cracks Down on Deceptive Advertising
Court of Justice addressed pricing advertisements with discounts - Ruling at First Instance Court
Hey there! Today, the Federal Court of Justice (BGH) is diving into the intricacies of price discount advertising for our favorite goods, kicking off a hearing at 10:00 AM that's got everyone talking. The focus is on grocery retailer Netto Marken-Discount, not to be mixed up with the chain they call "Netto with a dog logo" that's predominant in Northern and Eastern Germany.
In this instance, the Competition Centre is taking Netto to the mat for a sly advertising tactic. Netto cleverly advertised a coffee product in their brochure, boasting a hefty 36 percent reduction. The current price (4.44 euros) and the price from the previous week (6.99 euros) were both stated, but crucial information regarding the product's price within the last 30 days was tucked away in a tiny footnote.
The European Court of Justice has weighed in on reference prices
The Price Indication Ordinance spells out regulations for retailers touting price discounts—and for quite some time, there's been a legal debate over how precisely the so-called "reference price" should be conveyed, such as whether a footnote would suffice.
In September, the European Court of Justice decided:
- Advertising statements like "price highlight" must always reference the lowest price of the last 30 days.
- Discount percentage figures should be calculated based on this, too.
It remains to be seen when the BGH will issue a verdict in the Karlsruhe proceedings against Netto (Case No. I ZR 183/24).
- Federal Court of Justice
- Regulation
- Netto
- Advertising
- Questionable Discount Action
- Netto Marken-Discount
- Eastern Germany
Enrichment Data:This case is a significant step forward in ensuring truthful and transparent advertising practices. Here are key insights from the Federal Court of Justice's ruling against Netto Marken-Discount:
- Companies advertising price discounts must demonstrate that the discounted price genuinely represents a reduction from a previously valid reference price, with the latter having been in place for a reasonable period.
- The reference price advertised as the "original" or "regular" price must have been applied consistently and for a duration sufficient for it to qualify as the standard price before the discount.
- Companies should avoid deceiving consumers by implying discounts that do not accurately reflect a true price reduction by providing a verifiable and realistic baseline price for comparison.
These guidelines serve to curb deceptive advertising practices, making sure that so-called "discounts" have a tangible economic benefit for the consumer. Netto Marken-Discount was determined to have overstepped these boundaries by implying discounts that lacked backing in genuine prior prices.
The ruling highlights the importance of providing accurate pricing information in advertising, thereby safeguarding consumers from exploitative commercial tactics. If you're curious, you can read more about the specifics and legal reasoning in the Federal Court of Justice's decision in the Netto Marken-Discount case.
- The ruling by the Federal Court of Justice against Netto Marken-Discount emphasizes the significance of truthful and transparent advertising practices, especially with regard to price discounts.
- To ensure consumer protection, companies advertising price discounts must abide by regulations that demand authentic price reductions, with verifiable and consistent prior prices as the basis for comparison.
