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Article IT and Data Protection Intellectual Property, Media, and Art Law Competition, Retail and Consumer Law Commercial and International Contracts | 24/07/14 | 3 min. | Mahasti Razavi Alexandra Berg-Moussa
What does the future hold for French reference pricing regulations?
By a decision dated July 10, 2014, the Court of Justice of the European Union (CJEU) imposed sanctions on Belgium for inter alia non-conformity of its legislation, which imposes restrictions on the announcements of price reductions, with Directive 2005/29/EC of May 11, 2005 relating to unfair commercial practices (the “Directive”).
As a reminder, the Directive is designed to achieve full harmonization which prohibits inter alia Member States from adopting domestic rules that are more restrictive than those set forth by the Directive in the area of unfair business-to-consumer commercial practices.
Yet, Belgian regulations, which were the object of an assessment by the CJEU, provide that a company is only authorized to announce, to consumers, a price reduction compared to the price previously applied for the same product, when the new price is lower than the reference price, which is defined by law as being the lowest price the relevant company applied during the month preceding the first day for which the new price is announced.
In this context, the CJEU deems that:
- Relevant Belgian legislation focuses on announcements of price reductions, which constitute commercial practices, within the meaning of Article 2, paragraph d) of the Directive and subsequently fall under the scope of application of such Directive.
- Annex I of the Directive draws up an exhaustive list of commercial practices deemed unfair in all circumstances. The practices referred to in Belgian legislation on the announcement of price reductions are not included in such list.
- As a result, under the terms of the Directive, such practice cannot be deemed unfair – and therefore be prohibited - without being the object of an assessment, on a case by case basis (assessment “in concreto”), based on the criteria set out in Articles 5 to 9 of the Directive.
Therefore, according to the CJEU, such national regulations, which generally prohibit the practices that are not listed in Annex I of the Directive without carrying out an individual analysis of the “unfair” nature thereof in light of the criteria set out in Articles 5 to 9 of the Directive, are contrary to the full harmonization objective pursued by the Directive, and this even when the regulations aim to ensure a higher level of consumer protection.
Such decision was expected, including without doubt by the French authorities, as French regulations on the announcements of price reductions (order dated December 31, 2008) include restrictions that are similar to the aforementioned Belgian legislation.
As a reminder, similar views, adopted by the CJEU in 2009 and 2010 regarding Belgian, German and Austrian laws prohibiting other practices such as tie-in sales, lotteries and bonus sales, had had an impact in France. Indeed, by an Act dated May 17, 2011, the French legislator had amended the provisions of the Consumer Code, forbidding hitherto such practices in France, thus changing them from a “per se” prohibition to a prohibition “subject to the practices being of an unfair nature”.
Upon reading the decision of the CJEU of July 10, 2014, it is likely that French regulations on the announcements of price reductions, including without limitation the provisions thereof on reference pricing, will also be softened.
Sales reform: the end of floating sales
Act no. 2014-626 of June 18, 2014 relating to crafts, trade and very small businesses, amended the sales regulations.
For several years, the regulations allowed two “official” sales periods per year, of a duration of five weeks each, the dates of which are determined at national level by decree. Merchants were also entitled to a maximum of two weeks of additional sales, either one period of two weeks or two periods of a maximum of one week each, such dates being freely chosen by the latter (subject to the additional sales ending at least one month prior to the beginning of the “official” sales). Such sales are known as “floating sales”.
The rules for 2015 are changing: the duration of the two set periods of “official” sales has been increased from five to six weeks and an end has been put to “floating” sales./.
Mahasti Razavi - Partner
Alexandra Berg-Moussa - Counsel