In a communication published in January 2023, the President of the Office of Competition and Consumer Protection (UOKiK) made a number of remarks as to the implementation of the obligation under the Omnibus Directive to indicate, in price reduction announcements, the lowest price of a good in 30 days prior to the price reduction.
Several of the cases analysed, about which the UOKiK President had reservations, concern situations where, in addition to the prior price required to be indicated by the Omnibus Directive (i.e. the lowest price from 30 days before the reduction), traders also indicated another previously applied reference price. The communication from the UOKiK President implies a restrictive approach regarding the need to describe ‘crossed-out’ prices in promotion announcements.
According to the legislation, what are the requirements for describing prior prices? And does the Omnibus Directive really imply an obligation to describe ‘crossed-out’ price in every case?
What are the obligations concerning price reduction announcements under the Omnibus Directive
In any price reduction announcement, the Omnibus Directive requires traders to indicate the prior price of the good applied for a certain period of time.
As defined in the Omnibus Directive, the prior price is the price applied by a trader for at least 30 days prior to the application of the price reduction.
In order to properly comply with this obligation, it is important that the prior price is appropriately displayed.
Having analysed the Omnibus Directive, the act implementing it in Poland and the European Commission’s Guidance[i], it is clear that the requirements for the presentation and description of prior prices in an announcement depend to a large extent on whether the trader presents a single prior price or (usually for marketing reasons) chooses to present several different prior prices applied for a given good.
Indication of several different prior prices
Both the Directive and the act implementing it in Poland, introduce the requirement to indicate, in a price reduction announcement, the prior lowest price of the good applicable in the period of 30 days before the price reduction.
However, the legislation does not prevent other reference prior prices from also being communicated. These could be, for example, the regular price of the good differing from the lowest price during the 30 days prior to the price reduction. Market practice shows that traders often also refer to prior prices applicable immediately before the price reduction.
When referring to several different prior prices in a price reduction announcement, a few rules in particular should be borne in mind:
- The price reduction announcement should always refer to the lowest price from 30 days before the announcement. Other reference prices (e.g. regular prices, prices immediately before the reduction) may be used in addition to, but not instead of, the lowest price of the 30-day period before the price reduction
- If traders wish to display two reference prior prices, both should be properly described so that customers understand what they refer to. Both the prior price required by the Omnibus Directive and the second prior price should be provided with appropriate explanations
- The lowest price in the 30-day period before a discount is offered, as required by the Directive, must be properly displayed and other prior prices should not distract the consumer’s attention from the price required by the Omnibus Directive. The UOKiK President paid particular attention to the display of the lowest price in a font that was too small or not sufficiently distinguishable from the background. Information on the lowest price in the 30-day period should be displayed in the announcement more prominently than, or at least as prominently as, other prior prices (e.g. the regular price), if any
- If the announcement indicates a discount in percentage or amount (e.g. “-50%”, “-PLN 50”), it should include information on the level of the discount in relation to the price required by the Omnibus Directive.
A crossed-out price next to the current price in the announcement
There is some controversy about the concerns expressed by the UOKiK President, indicating a requirement to describe crossed-out prices in a situation where traders provide only a prior price (as a crossed-out price) next to the current price.
According to the communication of the UOKiK President, it is not permissible to indicate the current sale price and the crossed-out price without also indicating what the “crossed-out” price relates to, or to describe such a price otherwise than as “the lowest price of the good in the 30-day period before the discount”. The communication further indicates that terms such as, for example, “reference price” are not sufficient to describe this price.
The expectations of the UOKiK President in this respect can be considered too broad. The Omnibus Directive provides that discount information must include the prior price that applied for a certain period of time before a discount was offered, and specifies that this prior price means the lowest price over a period of no less than 30 days prior to the application of the discount.
It is therefore important that the prior price (e.g. displayed in a crossed-out form) is in fact the lowest price in the 30-day period before a discount. If, on the other hand, traders present only one prior price (the lowest price in the 30-day period before a discount) as the crossed-out price, it does not seem necessary to always provide this crossed-out price with a specific description.
The Omnibus Directive and its implementing act do not contain an explicit requirement to describe the prior price. Nor does the European Commission Guidance contain such an obligation, only referring to the need to accurately describe and explain the prior prices when traders refer to several of them in a single announcement. However, there is no such requirement in the European Commission Guidance where a single crossed-out price is displayed. In this case, the default assumption is that this is the lowest price over a period of at least 30 days prior to the announcement of the discount.
The aim of the Omnibus Directive is to combat the display of false discounts, which may consist in temporary, artificial price increases being followed by a discount or a significant discount. The objective of the Directive is achieved if the displayed crossed-out prices are in fact the lowest prices in the 30-day period, even if they are not additionally described with the specific phrase.
As long as the obligation to determine the crossed-out price taking into account the 30-day period preceding the price reduction is fulfilled and only one crossed-out price is indicated in the announcement next to the current price, the absence of a specific description of the crossed-out price will not mislead consumers. The mere absence of a specific description next to the ‘crossed-out’ price will not, in such a case, distort consumers’ beliefs in a way that is likely to influence their purchasing decisions.
Summary and recommendations
The above arguments show that, in contrast to the situation where several prior prices are displayed, traders are not obliged to describe the price in detail when only one crossed-out price is displayed. What is important, however, is that such a crossed-out price is in fact the lowest price in the 30-day period before a price reduction.
Notwithstanding the above assessment of the position of the UOKiK President, which we believe is too restrictive, the safest solution to avoid intervention by the authorities would be to display the crossed-out price, while describing it as “the lowest price in the 30-day period before the discount”, at least until doubts are clarified in case law.
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[i][i] ConsumerRights2023 – UOKiK President says “call” (in Polish: #PrawaKonsumenta2023 – Prezes UOKiK mówi „sprawdzam”) (https://uokik.gov.pl/aktualnosci.php?news_id=19234);
[i][i] 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 (https://eur-lex.europa.eu/legal-content/PL/TXT/?uri=CELEX%3A52021XC1229%2806%29)