Between Black Friday, Christmas offers, private sales and soon the arrival of sales, announcements of price reductions are multiplying. To start 2024 in compliance, here’s a rundown on the regulations applicable to price reduction ads.
Since May 28, 2022, new rules have governed price reduction advertising. These rules stem from Order no. 2021-1734 of December 22, 2021, transposing Directive (EU) 2019/2161 of November 27, 2019, known as the “Omnibus” Directive.
The regulations
Article L.112-1-1 of the French Consumer Code, paragraph 1, stipulates that “any announcement of a price reduction shall indicate the previous price charged by the professional prior to the application of the price reduction”.
But how is this “previous price”, also known as the “reference price”, to be determined?
The principle:
The answer can be found in paragraph 2 of article L.112-1-1 of the French Consumer Code, which sets out the following principle: “The previous price corresponds to the lowest price charged by the professional to all consumers during the last thirty days prior to the application of the price reduction”.
Thus, the previous price corresponds to the lowest price charged during the last thirty days prior to the application of the price reduction. This may be the list price – if there has been no price reduction in the last 30 days – or the last reduced price offered in the last 30 days.
Furthermore, if the promotional operation lasts more than 30 days, the seller is not obliged to modify the previous price: the previous price to be indicated is that “preceding the application of the price reduction”, and can be maintained for the entire duration of the promotional operation – provided that it is the same promotional operation.
As a result, it is important to keep proof of the reality of the reference price, and to be able to demonstrate that it has indeed been applied over the last 30 days, if necessary by producing details of sales made on the references concerned by the price reduction, an order form, or a sales receipt.
The exception:
Paragraph 3 of article L.112-1-1 of the French Consumer Code provides for an exception in the case of “successive price reductions over a given period”, for which it is possible to take as the reference price “the price charged before the first price reduction was applied”.
With regard to sales: if the professional grants several markdowns during the same sales period – corresponding to a single promotional operation – the “previous price” is that charged during the last 30 days prior to the start of the sales.
Scope of application:
Price reduction advertisements for perishable products threatened by rapid deterioration are not affected.
Penalties :
Failure to comply with the provisions of article L. 112-1-1 of the French Consumer Code is considered a misleading commercial practice. Penalties include two years’ imprisonment, a fine of up to 1,500,000 euros for legal entities and 300,000 euros for individuals, or 10% of average annual sales, calculated on the basis of the last three annual sales known at the time of the incident, or 50% of the expenses incurred in carrying out the promotional operation.
