Stringent Rules on Announcing Price Reductions Repealed

On 26 October 2015, the Belgian federal legislature repealed the rules governing announcements of price reductions, in order to align Belgian law to EU law. Indeed, in a judgment of 10 July 2014, the Court of Justice of the European Union had found the Belgian rules to be incompatible with European legislation.

It should be recalled that the Belgian rules provided that a business that wished to announce a price reduction had to fulfil a certain number of conditions: it was obliged to inform consumers of the reference price, namely the lowest price offered by the business for the same product during the month preceding the first day of the effective reduction and, finally, the reduction must be offered for a least one day and no more than one month.

Does this mean that businesses can now do whatever they like in this regard? Of course not!

Indeed, the announcement of a price reduction is a commercial practice which must, as such, comply with the legislation on unfair or misleading consumer trade practices (and consequently may not be deceptive or mislead consumers).

Businesses must thus always announce price reductions in an honest and transparent manner. What does this mean exactly?  The guidelines of the economic inspectorate, on which the Consumer Council has rendered an opinion, are intended to shed light on this matter. Below we present a few of these guidelines.

Firstly, a reference price remains indispensable. Indeed, consumers must be able to assess whether they are being offered a real reduction.

The reference price is now the price at which the product is offered for sale during a "normal period" (and thus no longer a fixed period of 30 days) preceding the price reduction. This normal period must be sufficiently long to avoid fictitious price reductions. For example, a price rise from EUR 100 to EUR 150 for two weeks, only to subsequently lower it again to EUR 100, is considered a fictitious reduction and thus a misleading trade practice.

Whether the normal period is sufficiently long will depend on the facts (it will differ, for example, for perishable goods).

Nonetheless, during the normal period, short-term price fluctuations are permissible, but they will not be taken into account to determine the reference price. For example, a reduction applied for an occasional event, such as a clearance sale, is disregarded when determining the reference price.

Finally, in the absence of statutory provisions on this subject, consumers must be able to clearly assess when the price reduction applies and for how long. They must also know if the reduction has already been applied to the indicated price or if it will be deducted at the till.

As you can see, the rules remain in force, although they have been relaxed to a certain extent. In any case, consumers must always be clearly informed and cannot be misled.

The guidelines can be consulted here (NL, FR).