Information on price reductions: descriptions of displayed prices

5 June 2023 | Knowledge, News, The Right Focus

On 8 May this year, the President of the Competition and Consumer Protection Office (UOKiK) published the “Information on Price Reductions. Explanations of the President of the Competition and Consumer Protection Office” (“Explanations”) on how to interpret and apply the rules resulting from the implementation of the Omnibus Directive.[1] The Explanations contain numerous examples and are intended to help dispel doubts about certain aspects of the new rules.[2] The Explanations do not, however, constitute a source of generally binding law and are not binding on courts and other authorities, but may affect the interpretation of the rules and, as a consequence, traders.

Since the start of work on the implementation of the Omnibus Directive, many questions have been raised about the way in which prices should be displayed, including the need for appropriate price descriptions. Below we discuss price description requirements and different ways of displaying prices in online stores, depending on whether they are displayed in product search engines, on product cards or via a mobile app. Our publication also takes into account the EC Guidance[3], in particular where the Explanations interpret similar issues differently.

Displaying prices: does the Omnibus Directive or the Price Information Act really require a crossed-out price to be described and can the terms “reference price”, “prior price”, etc. be used

The UOKiK President, both in previous publications[4] and in the Explanations published in May, indicated that crossed-out prices must be properly described and that such price descriptions should have specific wording.

The following wordings were found to be acceptable:

  • Lowest price in 30 days prior to the reduction
  • Lowest price in the 30-day period prior to the reduction
  • Lowest price within 30 days prior to the reduction

The UOKiK President also gave examples of unacceptable wording, including:

  • Reference price
  • Omnibus price
  • Lowest price in the last 30 days
  • Prior/last lowest price
  • Price 30 days prior to the reduction

When analysing the position of the UOKiK President in relation to the requirement to describe crossed-out prices, it should be borne in mind that the purpose of the new rules (as the President rightly pointed out in the Explanations) is to eliminate false price reductions, i.e. to prevent traders from artificially inflating prices just before a promotion to later present the promotion as more attractive than it actually is. The solution is intended precisely to allow consumers to compare the promotional price with the genuine lowest price existing 30 days prior to the reduction.

The position of the UOKiK President is clear, stating that multiple displayed crossed-out prices (e.g. a crossed-out lowest price from 30 days prior to the reduction displayed simultaneously with a crossed-out regular price) should be explained. In a situation where several prior reference prices are displayed without their proper description, it is difficult for consumers to assess which of the crossed-out prices is the reference price required by the new rules.

The obligation to explain the differences when a current price and several prior reference prices are displayed at the same time also follows from the EC Guidance, which states that – when a total of three prices (the current price and two reference prices) are displayed – the reference prices should be explained in a clear and not confusing manner. Such price display should also not detract customers’ attention from the lowest price in the 30-day period.

However, the EC Guidance does not explicitly state the requirement for a similar price explanation when only two prices are displayed – the current price and the crossed-out price (which is actually the lowest price in 30 days prior to the reduction).

So how should the new rules be applied? Are detailed price descriptions mandatory? Below we present the pros and cons of such a solution in the light of the Omnibus Directive and the Price Information Act.[5]

Arguments in favour of the obligation to describe crossed-out prices:

  • In practice, traders often cross out different types of price (e.g. the average price, the regular price, or the price from the period immediately before the reduction) – hence the need for such crossed-out prices to be clarified so that there is no doubt about what they refer to
  • The Act requires prices (including prior prices) to be displayed in a clear and not confusing manner
  • The Act can be interpreted as imposing stricter requirements than the Omnibus Directive in relation to the indication of reference prices. Whereas the Omnibus Directive only requires the lowest price in the 30-day period prior to the application of the reduction to be “indicated”, the Act – taken literally – imposes an obligation to provide “information” on the lowest price of a good or service in the 30-day period prior to the application of the reduction (the obligation to provide information in a communication may be understood as going beyond the obligation to only “indicate” the reference price).

Arguments against the obligation to describe crossed-out prices:

The purpose of the Omnibus Directive is to prevent price manipulation for the purpose of presenting false price reductions. This will be fully achieved if traders use a reference to the lowest price in the 30 days prior to the reduction (i.e. if the crossed-out price is the lowest price in the 30 days prior to the reduction), even if the price is not described in any way

  • The Omnibus Directive introduces the obligation to indicate a “prior price” and defines it, requiring also that “prior price” be designated in a specific way. These obligations are met if the prior price is indicated as the lowest price in 30 days prior to the application of the reduction. The crossing out itself clearly communicates that the crossed-out price is the prior price
  • Neither the Omnibus Directive nor the Act explicitly requires the use of a specific phrase to indicate the required reference price
  • The EC Guidance indicates that a description is required when the current price and two different prior prices are displayed, e.g. the lowest price and the regular price. The EC Guidance does not indicate a requirement to explain the prices when only two prices are displayed, i.e. the current price and the prior price.

Descriptions of crossed-out prices: websites, search results, mobile apps

Notwithstanding the general obligation in the Explanations to describe prior prices accurately (e.g. in a crossed-out form), the UOKiK President distinguished situations in which price descriptions may be abbreviated. In particular, with regard to traders offering goods and services on the Internet, these are as follows:

  • Search results – if there is limited space for price descriptions in search results, it is permissible to shorten the description and use a phrase such as “lowest price”. However, when clicking on a product (after navigating to a product card), full explanations should appear next to the prices, stating e.g. “lowest price in 30 days prior to the reduction”.[6]
  • Mobile application – if not technically feasible, prices may be explained in short form, e.g. as the “lowest price”, as in the case of search results. However, if prices are described in short form, a full explanation should be provided, e.g. in a tooltip next to such a short description.[7]
  • Product card – prices on an online product card should be explained directly next to the product prices (without using a tooltip or short form). Full price explanations should be visible without the need for additional action, such as clicking or hovering over a tooltip.

Summary

In our view, the position of the UOKiK President in relation to the price description requirement should be regarded as restrictive. In a situation where only two prices are displayed (the current price and the crossed-out price), the objectives of the Omnibus Directive and the Act, i.e. the prevention of false price reductions, are properly achieved if the crossed-out price is in fact the lowest price applied in the 30-day period prior to the application of the reduction. Therefore, if only one prior crossed-out price is displayed, there seems to be no need for a detailed description, let alone a description with specific wording which would seem to reflect the intention of the EU legislature.

However, the safest and therefore recommended solution, in the light of the position presented in the Explanations, is to place the descriptions next to the crossed-out prices, as recommended by the UOKiK President.

If you have any questions, please do not hesitate to contact us.

Link to the Explanations of the UOKiK President.

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Krzysztof Zięba

Aminata Traore-Michalak

 

[1] Directive (EU) 2019/2161 of the European Parliament and of the Council of 27 November 2019 amending Council Directive 93/13/EEC and Directives 98/6/EC, 2005/29/EC and 2011/83/EU of the European Parliament and of the Council as regards the better enforcement and modernisation of Union consumer protection rules (OJ EU L No. 328, p. 7, the “Omnibus Directive”).

[2] Act of 1 December 2022 amending the Consumer Rights Act and certain other acts (Journal of Laws 2022, item 2581).

[3] Commission Notice – Guidance on the interpretation and application of Article 6a of Directive 98/6/EC of the European Parliament and of the Council on consumer protection in the indication of the prices of products offered to consumers (OJ EU C No. 526, p. 130, the “EC Guidance”).

[4] https://uokik.gov.pl/aktualnosci.php?news_id=19234&news_page=2, last accessed 17.05.2023.

[5] Act of 9 May 2014 on price information for goods and services (uniform text: Journal of Laws of 2023, item 168, the “Act”).

[6] Cf. example price display in a result list, Explanations of the UOKiK President, p. 39.

[7] Cf. example price display in a mobile app, Ibidem, p. 33.

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Krzysztof Zięba

Krzysztof Zięba

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