On 6 January 2023 Act No. 374/2022 Coll., amending Act No. 634/1992 Coll., on Consumer Protection, as amended, and Act No. 89/2012 Coll., the Civil Code, as amended, entered into force. In particular, this Act transposes two EU Directives, namely Directive 2019/770 of the European Parliament and the Council and Directive 2019/2161 of the European Parliament and the Council and contains several significant changes in the area of consumer law.
Among other things, the adopted amendment extends the Consumer Protection Act with a new Section 12a, which regulates the obligations of the entrepreneur related to the notification of discounts, in line with European legislation. The objectives of this amendment include strengthening transparency in informing consumers about discounts and, in particular, preventing artificial price increases and misleading consumers about the amount of the discount provided.
Discount notification rules
The information on the product’s lowest price within the legally defined period must be provided as a reference price when informing about a discount on the product’s price.
According to Section 12a (1) of the Consumer Protection Act, this lowest price means the lowest price at which the entrepreneur as seller offered and sold the product:
- within 30 days before the discount is granted, or
- from the time the seller began offering and selling the product until the time the discount is granted if the product has been on sale for less than 30 days; or
- within 30 days before the first discount is granted, if the seller increases the discount on the price gradually (according to the EU Interpretative Guidelines, the increase must be continuous without interruption).
In addition to information on the lowest price of the product, the consumer must always be informed of the final price of the products sold. This means that, even in the case of short-term across-the-board discounts, each product must be marked with the lowest reference price and the price applicable at the time of the offer.
The obligation to indicate the lowest price of the product as the reference price does not mean that the seller cannot indicate any other price (e.g. the regular price or the price before the announcement of the discount). However, the price must be properly explained, this other price must not cause confusion with the lowest reference price and must not distract the consumer from the mandatory lowest reference price.
At the same time, when communicating a discount with a percentage, it is recommended, inter alia, by the EU interpretative guidelines, that the percentage should be based on the mandatorily stated lowest reference price of the product and not on any other price stated for the product to avoid misleading the consumer.
It is stipulated that the new statutory regulation relating to the notification of discounts does not apply to perishable products or products with a short shelf life (on this see below).
When do the discount notification rules apply?
The new rules on the notification of discounts must be complied with by all businesses that sell or offer for sale products that are part of their business and deal with consumers in the course of their business.
The new obligations, therefore, do not apply to intermediaries who merely provide traders with the means to sell their products. However, intermediaries cannot be the actual sellers of the products or sell the products on behalf of another seller. In this case they would also have to comply with the new discount notification rules.
The new rules will apply to all communications that may give the consumer the impression of a price reduction in all sales methods. Thus, no distinction is made between sales in retail stores or, for example, sales via the internet (in particular, e-shops).
Communications that may give the consumer the impression of a price reduction include, for example, “special offer” or “Black Friday” notices, and the regulation of discount notices also applies to blanket discount notices, which may include all products currently on sale in the seller’s offer. In this case, the lowest price does not have to be displayed on the same medium as the discount notice, but, for example, in the case of a notice (banner) displayed in a store announcing “20% off everything today”, the required lowest reference price must be displayed for each product.
On the contrary, the new legislation will not generally apply to:
- general communications which do not draw attention to specific discount promotions but merely inform consumers about the products sold, provided that such communications do not give the appearance of a discount,
- genuinely tailored discounts in the context of loyalty programs, as discounts only for a defined group of customers (in particular, a discount on special occasions such as a customer’s birthday, a discount for a customer’s previous purchases, or the collection of points which the customer uses to obtain a discount on a subsequent purchase); however, please note that the new legislation will continue to apply to generally communicated discounts, for example, for all members of a loyalty program, which are accessible to the majority of consumers (for example, “20% discount for all members of a loyalty program”),
- combined or conditional offers (for example, “20% off for the purchase of three products”).
Exceptions to the new discount notification obligations
As already mentioned above, the described obligations to notify discounts do not apply in the case of discounts on perishable products (i.e. time and temperature-sensitive products that require careful handling and transport to preserve their characteristics) or products with a short shelf life.
It is not defined exactly which goods fall under this exemption, but typically it will be fresh food and beverages either for immediate consumption or with a specified short shelf life. Examples of perishable and short shelf-life products would certainly include yogurt and other dairy products, ice cream, delicatessen products, meat products and cold cuts, fruit, vegetables, fresh bakery products, chilled poultry and poultry products, eggs, fresh chilled fish and fish products.
The exception is therefore primarily applicable to goods that are marked with a “use by” date, i.e. goods which cannot be resold after that date. In addition, the exemption applies to cases where products are not marked with a use-by or best-before date because they are intended for immediate consumption. Conversely, we believe that goods with only a stated best-before date are unlikely to be included in this exemption and will therefore need to comply with the new rules when notifying price discounts.
However, the exception to the new discount notification obligations does not apply only to food. It will also cover non-food products that have similar characteristics to food marked with an expiry date or intended for immediate consumption, e.g. cut flowers.
The main reason for introducing this exemption is that sellers may need to discount such goods more frequently to sell them before the expiry date. In addition to the above, we note, that there is logically no clear practice of the controlling authorities, let alone case law conclusions on this matter for the time being.
To clarify, it should be added that this exception applies to goods that are perishable because of their physical composition and characteristics, not to goods that become “obsolete” in the commercial sense, as may occur with seasonal clothing.
The newly introduced regulation applies to all businesses as sellers of goods to consumers and, as it has already come into force, these sellers must ensure compliance.
For the retailers concerned, this means, in particular, adapting their discount notification procedures to comply with the new rules. This is to enhance transparency in the communication of discounts to consumers.
If you have any questions about the new discount notification regulation described above, or if you need assistance in establishing proper discount communication procedures, please do not hesitate to contact us at any time.
Mgr. Kateřina Roučková, junior lawyer – firstname.lastname@example.org
Mgr. Jakub Málek, managing partner – email@example.com
JUDr. Miloš Kulda, Ph.D., attorney-at-law – firstname.lastname@example.org
03. 02. 2023