Consumer protection and price transparency

On September 26, 2024, the Court of Justice of the European Union (CJEU) issued a key judgment on consumer protection related to price reductions, signaling significant changes to EU law. In Case C-330/23, concerning disputes between the German consumer association Verbraucherzentrale Baden-Württemberg and the Aldi Süd chain, the Court was asked how the concept of "prior price" should be interpreted and how price reductions may be presented in advertisements in accordance with Directive 98/6/EC. This judgment sets a precedent that will have a significant impact on the advertising policies of large retail chains and highlights the importance of price transparency in the context of consumer protection in Europe.

Background and legal framework

The dispute began with Aldi Süd advertisements featuring price reductions on selected food products, such as bananas and pineapples. These prices were compared to other prices—one crossed-out, previous price, and the current, reduced price, as well as a percentage reduction. The key issue was that the reduction was not always based on the lowest price in the 30 days preceding the promotion—as required by Article 6a(1) and (2) of Directive 98/6—but rather on a price that might have been increased shortly before the promotion was announced.

Directive 98/6/EC regulates the way prices are communicated, requiring them to be clearly and understandably presented. The introduction of Article 6a to the directive in 2019 aimed to ensure consumers have access to reliable information about the "previous price" to avoid artificial price manipulation shortly before a promotion. The new regulations aim to prevent unfair commercial practices, such as misleading consumers about the attractiveness of prices.

The CJEU decision and its significance

In its judgment, the CJEU clarified that price reductions in advertisements must be calculated by reference to the "prior price," as defined in Article 6a(2) of Directive 98/6, which is the lowest price applicable for at least 30 days prior to the reduction. The Court also ruled that all forms of representation of reductions, including percentages and advertising slogans, must refer to this price. According to the Court, derogating from this principle would lead to confusion for consumers who expect and assume that the reduction in the product's price is genuine and not based on price manipulation.

In its justification, the CJEU emphasized that consumer protection and enabling them to make informed purchasing decisions are among the priorities of EU policy. It also cited the importance of transparency and equal access to information, pointing out that any violation of the principles of accurate price information is inconsistent with the fundamental values ​​of the European Union's internal market.

The economic context and practical consequences of the judgment

The CJEU's decision has significant consequences for both consumers and businesses, particularly large companies that often employ marketing strategies based on dynamic price changes. Preliminary rulings issued by the Court of Justice of the European Union are binding on national courts in cases involving a question of interpretation of EU law. Furthermore, according to the "acte éclairé" doctrine, such a ruling has erga omnes effects, meaning it can significantly reduce prohibited practices among businesses. This necessitates greater caution in communicating discounts or promotions and forces retail chains to more rigorously monitor the display of "previous prices." For many companies, this may mean retraining marketing staff, modifying pricing strategies, and implementing new procedures consistent with CJEU guidelines and EU standards.

From a consumer perspective, this ruling is undoubtedly a step in the right direction – towards increased transparency and fairness in the market. The CJEU's ruling also has an educational dimension – consumers are becoming more aware of their rights, which makes it easier for them to effectively pursue claims in the event of a dispute.

Conclusions and the future of regulation

The latest CJEU ruling in the Aldi Süd case demonstrates the importance of ensuring clear and uniform consumer protection rules across the European Union. It exemplifies the EU's pro-consumer approach to internal market regulation, aimed at creating a fair shopping environment.

It's also worth noting that the provisions of Directive 98/6, as well as their interpretation by the Court, may become the basis for developing further regulations on price information in the future. This judgment will serve as a reference point not only for future cases related to price reductions but also for the development of consumer protection law at both the national and EU levels.

Further observations on the implementation of this judgment and its effects on the EU market will show how much change it will bring to commercial practices in Europe.

This article is supplemented by a commentary by ecommerce.legal expert Marcin Tomczak, who highlights the importance of the CJEU judgment for the future of pricing practices in trade.     

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