The aim of this article is to bring into wider awareness a recent judgment of the Regional Court in Pilsen, in which the question of the admissibility of long-term discounts to consumers was considered. On 18 February 2025, the Court ruled on an administrative action brought in a dispute between the plaintiff company operating a small shoe shop and the defendant Czech Trade Inspection Authority (hereinafter the “CTIA”).[1] The plaintiff sought to annul the CTIA’s decision imposing a fine on it for allegedly using a misleading commercial practice in marking discounts to consumers. The Regional Court in Pilsen annulled the contested decision of the CTIA to impose a penalty and, at the same time, in its reasoning, expressed in some detail its interpretation of the term “discount” and its assessment of the effects of such a commercial communication on the average consumer.
The factual basis of the case
In its decision contested by the administrative action, the CTIA came to the conclusion that the applicant, as the operator of a small shoe shop in Pilsen, had committed an unfair commercial practice by marking two pairs of shoes in its shop with labels bearing the word “discount”, even though they were goods offered at a reduced price in both cases for a longer period of time – more than one or two years. The CTIA considered such conduct to be misleading because, in its view, the word “discount” evokes a limited-time promotion and not a long-term reduced price (e.g. in the context of a sale or a close-out sale). The applicant was thus found guilty by the CTIA of an offence of breaching the prohibition on the use of unfair commercial practices[2] under Act No 634/1992 Coll. on consumer protection, as amended (hereinafter the “CPA”), as when selling the goods in question she should have misled the consumer about the existence of a specific price advantage.[3]
According to the opinion of the CTIA in the contested decision, the term “discount” can only be used to describe a short, time-limited period during which the goods are offered at a reduced price, and after the end of that period the price of the goods returns to the original price, or the goods are no longer sold. According to the CTIA, the term “discount” is therefore intended to evoke an exceptional offer, not a normal price situation. If the applicant offered the footwear in question at a reduced price for more than one year, it was not, in the opinion of the CTIA, a discount but a sale in the sense of a long-term price advantage. According to the CTIA, the applicant’s chosen method of communicating the price reduction could thus mislead consumers as to the existence of a specific price advantage, i.e. a discount in the sense defined by the CTIA.
Thus, according to the CTIA, the applicant violated the prohibition of misleading commercial practice by, inter alia, presenting the long-term price reduction as a normal discount (including the color coding of the price tags and the absence of information that in one case it was a sale). The CTIA essentially followed its usual practice of interpreting the term “discount”.
In addition to referring to the specific facts of the case, the plaintiff objected to the conclusions of the CTIA, arguing, inter alia, that it had not fulfilled the facts of the alleged offence, since the “discount” was not imposed on the customer in any way and there was nothing to suggest that it was a time-limited offer to put the customer under pressure to buy the product immediately (in the case of one of the pairs of shoes in question, it was even supposed to be a sale on the last pair, as was apparent from the price tag). According to the plaintiff, the term “discount” cannot be reduced to a special limited time offer. Moreover, the administrative authorities did not state how they arrived at that interpretation, nor did they clarify the difference between a short-term discount and a long-term discount. On the contrary, the plaintiff argued that a discount can also be a longer-term price advantage (typically in the context of a sale). According to the applicant, any other label – for example, “long-term price reduction”, “sale” or “after-sale” – would not convey a different message to the average consumer. The plaintiff thus considered the administrative authority’s demand for a precise word distinction to be an expression of excessive formalism on the part of the CTIA.
The Court’s assessment and its criticism of the administrative authorities’ blanket approach
In assessing the case, the Court logically relied on the relevant provisions of the CPA,[4] but the interpretation of the existing case law of the Court of Justice of the European Union (CJEU) also played an important role.[5]
The central point of assessment was whether the indication of a “discount” on the price tags of goods sold at a reduced price over a long period of time was likely to mislead the average consumer as to the existence of a particular price advantage and lead him to make a purchase decision that he would not otherwise have made.
The Court found a fundamental flaw in the reasoning of the CTIA, which, in its view, applied an overly generalized approach. The CTIA based its interpretation of the term “discount” on the consumer’s hypothetical expectations as to the short-term nature of the discount, without providing any proper support for such an interpretation. On the contrary, the Court emphasized that there is currently no legal basis, either in law, case-law or legal scholarship, for a blanket conclusion that the term “discount” means only a short-term special promotion. According to the Court, what is decisive in each case are the specific facts, in particular the manner and circumstances in which the information about the discount was communicated to the consumer. Moreover, in the present case, the CTIA did not even deal with the applicant’s objection that the sign in one case indicated a sale of goods – which, according to the Court, should not give the impression of an immediate purchase to the ordinary consumer.
The Court points out that the important factor is, of course, first and foremost the design of the discount price tag itself. In that context, a commercial practice may be misleading even if it contains truthful information – but only if it is capable of misleading the consumer to such an extent that his decision is not informed and expedient. However, this was not the case for the plaintiff, according to the Court. Their price labels contained truthful information, both the original price and the reduced price (and in the case of one product even indicated that it was the last pair),[6] and the form of the label was found to be appropriate without any strong marketing messages, graphic highlighting or the use of words such as “special price”, which could indicate the exceptional nature or time-limited nature of the offer.
Furthermore, the Court mentioned the need to assess the commercial practice also in the context of the overall presentation and the specifics of the point of sale – the establishment. In this case, it was a small specialized shop with an individual approach, not a supermarket with blanket discount campaigns.[7] Although we understand in principle the direction of the Court’s reasoning, we believe that, without further argumentation, it slips too far into simplification and generalization of the view of the matter, which is precisely what the Court itself criticizes the administrative authority for.
The Court thus emphasizes, in several places, the assessment of the specific context and the overall impression of the discount label on the consumer when assessing whether or not it is a practice in accordance with the law. It is not possible to take individual elements out of context and to conclude without further ado that every “discount” label is automatically misleading unless it is expressly limited in time. It must always be ascertained whether the commercial practice (discount) is capable of substantially impairing the behavior of a normally informed, reasonably observant and cautious consumer, taking into account the specific circumstances of the particular sales situation.
In that judgment, the Court concluded that in the present case the plaintiff had not been proven to have committed the offence of misleading commercial practice in the indication of discounts to consumers. According to the Court, the plaintiff could not mislead the average consumer as to the existence of a specific price advantage by using discount price tags on long term discounted goods so that the average consumer would make a purchasing decision that he would not otherwise have made.
Our evaluation
We generally welcome the judgment of the Regional Court in Pilsen, as it brings clearly formulated opinions on the question of the admissibility of long-term discounts in relation to potential misleading commercial practices towards consumers.
In particular, we consider it essential that the Court has clearly opposed the frequent practice of the CTIA, which too generally and without clear support, particularly in legislation or case law,[8] proceeded on the assumption that a price tag with the word “discount” must automatically give the consumer the impression that the price reduction is short-term and exceptional, and that it is therefore necessary to buy the goods without hesitation for that reason. In view of the fact that the current legislation and subsequent case-law do not expressly regulate the duration of discount promotions, the mere fact that the discount lasts for a longer period of time does not automatically imply that it is an impermissible misleading commercial practice towards the consumer.
Nevertheless, the legal limit remains that the seller’s conduct towards the consumer cannot be unfair within the meaning of the CPA even in the present situation. However, such an assessment in relation to discounts cannot be made in a blanket and overly formalistic manner.
Therefore, in this regard, we agree with the opinion of the Regional Court in Pilsen that in order to determine the actual effects of information about a discount on the consumer, it is always necessary to consider a wide range of factors from the form of the price tag, the manner of presentation of the discount, the circumstances and reasons for the discount offer, the nature of the point of sale, as well as all other circumstances of the sale, including the duration of the discount. The resulting conclusions on the influence of these factors on the behavior and expectations of the (average) consumer, and in particular whether the sale of goods at a discount for a long period of time could (not) mislead the consumer, must be made on the basis of a strictly individual assessment of the specific facts of the particular discount.
On the other hand, however, it cannot be ignored that the Court did not develop some of its reasoning in sufficient detail, which may also have the effect of being somewhat generalized and simplistic (as illustrated by some of the examples in the text of this article).
At the same time, it must be stressed and taken into account that the Court in the present case was dealing exclusively with a specific case of the sale of goods, with a specific indication of a discount and in a specific shop. It was not the Court’s ambition to comment in this judgment on the general interpretation of the discount or to provide a generally unifying interpretation, which is a task for the Supreme Administrative Court of the Czech Republic in the context of administrative justice. Thus, the Court’s conclusions must be seen in this restrictive light, subject to the above reservation.
Conclusion
We view the judgment and the Court’s conclusions therein on the issue of the admissibility of long-term discounts to consumers as generally logical and legally sound. It will therefore be interesting to follow further case law developments on this topic, as well as a possible shift in the approach and assessment by the CTIA. For the time being, however, we can only assume whether the above-mentioned judgment of the Regional Court in Pilsen will actually foreshadow further future developments and direction of the legal interpretation of the above-mentioned issue, or whether, on the contrary, it will not be followed by it and will remain just one of the isolated cases of opposition to the interpretation of the CTIA. From our position, we are slightly optimistic about the first option, but only time and actual practice will ultimately tell.
Should you have any questions on this topic, or any other issue related to consumer protection or misleading commercial practices, please do not hesitate to contact us.
[1] Judgment of the Regional Court in Pilsen of 18 February 2025, No. 57 A 10/2024–34.
[2] Pursuant to Article 4(4) of the CPA.
[3] Pursuant to Section 5(2)(d) of the CPA.
[4] Particularly Sections 4(4) and 5(2)(d) of the CPA in relation to the definition of misleading commercial practice.
[5] In particular with regard to the implementation of Directive 2005/29/EC on unfair commercial practices.
[6] Moreover, according to the Court, footwear belongs to the category of goods which the consumer purchases when he needs them and thus are not goods which he uses once (e.g. by eating food). It is therefore a good naturally intended for long-term use, for which the consumer can expect to sell individual items – we do not consider the Court’s perception in the judgment to be sufficiently developed, which may make it appear too simplistic or even speculative.
[7] As an example, the Court states that the average consumer will have different expectations as to the nature and duration of a discount promotion in a supermarket with a large number of discounts on a large number of products and will have different expectations in a specialized small shop with one sales assistant.
[8] If such arguments of the CTIA were attached, they were often based only on documents of an interpretative nature, but without legal binding force.
JUDr. Miloš Kulda, Ph.D., attorney – kulda@plegal.cz
JUDr. Tereza Pechová, junior lawyer – pechova@plegal.cz
5. 5. 2025