New ECJ Judgement on the Price Indication Directive: Implications for Online Retailers and Marketplaces

The European Court of Justice (ECJ), in a judgement made on 26 September 2024, has decided that price reduction announcements must always refer to the lowest price in the last 30 days. The judgment concerns the interpretation of the Price Indication Directive (Directive 98/6/EC as amended, “PID”), following a preliminary ruling request in litigation of a German consumer protection organization against the retailer Aldi Süd (Case C-330/23). The decision has significant implications for both offline and online retailers engaging in price-reduction announcements within the EU.

We now expect price comparisons and price-reduction announcement to be under special scrutiny by consumer protection associations and authorities, considering also that some of them already have tried to squeeze price comparisons under the Dark Pattern prohibition in the Digital Services Act.

Background of the Case

The case originated from a legal dispute in Germany, where Verbraucherzentrale Baden-Württemberg e.V. brought action against Aldi Süd Dienstleistungs-SE & Co. oHG, alleging harmful consumer advertising and challenging their price-reduction announcements. 

In one brochure, the defendant advertised six food items. Each item featured two price indications: a larger price with an asterisk and a smaller, struck-through price in the corner. For some items, a percentage was shown next to it. In one case, a box only stated “Price highlight”. Each price tile also included a notice stating: “Last selling price. Lowest price in the last 30 days: …” The struck-through prices were higher than the lowest price in the last 30 days.

Legal Issue

Article 6a PID specifies the information to be provided in a price-reduction announcement (advertisement) and when it can be used, while leaving the manner of its provision open to interpretation.

Article 6a(1) of the PID stipulates that any announcement of a price reduction must indicate the prior price applied by the trader for a determined time period prior to the application of the price reduction. Article 6a(2) defines that the prior price generally means the lowest price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction. 

The ECJ had to answer the following questions from the referring German court:

• Are Article 6a(1) and 6a(2) of the PID to be interpreted as meaning that a percentage mentioned in an announcement of a price reduction may relate only to the prior price within the meaning of Article 6a(2) of the PID?
• Are Article 6a(1) and 6a(2) of the PID to be interpreted as meaning that emphasis in advertising which is intended to stress the reasonable price of an offer (such as the description of the price as a ‘Price Highlight’), where it is used in an announcement of a price reduction, must relate to the prior price within the meaning of Article 6a(2) of the PID?

ECJ’s Ruling

The ECJ ruled that Articles 6a(1) and 6a(2) of the PID must be interpreted as requiring that any price reduction announcement, whether presented as a percentage discount or through promotional statements highlighting the advantageous nature of the price, must be based on the "prior price" as defined in Article 6a(2) of the PID.

Specifically, the court held:

The term "reduction" generally refers to a decrease from a previously applied price. Thus, it is generally excluded that the announcement of the price reduction refers to an equal or even higher prior price.

The announced price reduction must be calculated based on the "prior price”, which generally is the lowest price applied by the trader in the 30 days preceding the price reduction. The ECJ concludes that this interpretation aligns with the objectives of the PID, including enhancing consumer information and ensuring transparent pricing. The mere mentioning of the prior price in a price-reduction announcement, without actually basing the reduction on it, would not sufficiently prevent misleading advertising. 

Therefore, the court concluded that any declared reduction in the selling price of a product must reference the prior price as defined in Article 6a(2) of the PID.

Key Takeaways and Outlook

ECJ's ruling provides guidelines for how price reductions should be advertised to consumers. However, the ECJ neither specifically addresses what constitutes a "price reduction announcement" nor scenarios where an article has been offered for less than 30 days. In any case, the ruling gives reason for retailers to review their price-reduction practices.

Compliance with PID-based price rules as interpreted in the ECJ ruling is key for companies in all EU member states. This includes the following jurisdictions referenced for illustrative purposes: 

• In Germany, the German court which referred the questions to the ECJ (Regional Court Düsseldorf) will now decide the case based on the ECJ ruling. A few days before the ECJ ruling, another German court (Higher Regional Court Nuremberg) held that price-reduction based advertising is in breach of law if a reasonably informed average consumer cannot easily determine the prior price within PID meaning based on the information included in the advertising. 
• In the same vein in Italy, even prior to the entry into force of Article 17-bis of the Italian Consumer Code which transpose the PID price rules, the Italian Competition Authority had already conducted several investigations into reports of unclear and suspiciously large price reductions allegedly in breach of the rules prohibiting unfair commercial practices. This includes cases in relation to traders selling products related to the Covid-19 pandemic as well as to a retail company specializing in the sale of household goods, kitchenware, home decor and furniture.
• In Poland, the President of the Office of Competition and Consumer Protection (the OCCP) published regulatory guidance regarding the PID price rules, which were transposed into Polish law by way of the Law on Price Information of Goods and Services. The regulatory view taken by the OCCP is generally in line with the new ECJ ruling. 
• ECJ’s ruling also concurs with the position taken by the authorities in the Czech Republic. In reply to the Aldi Süd case, the Czech Government sent a written submission to the ECJ stating that a percentage mentioned in an announcement of a price reduction may relate only to the PID prior price. Earlier, the Czech Trade Inspection Authority, which supervises trader compliance in this area, published regulatory guidance in line with the regulatory view now taken by the ECJ.
   

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