Price reductions in France: What's new?
The harmonization of the rules governing promotions and commercial practices in the EU is making progress. It is, however, still underway, as various member states take steps to try and conform.
France recently amended the rules applicable to price reductions, through an Arrêté enacted on March 11, 2015, with the aim of complying with the 2005/29CE Directive which precludes, in its Article 4, the maintenance in force of national measures that would add to the ones on the list of unfair practices in Annex I to that Directive; such list being exhaustive.
On July 10, 2014, the European Court of Justice handed down a decision against the Kingdom of Belgium1 sanctioning its national legislation on price reductions, according to which any announcement of a price reduction must refer to the lowest price applied throughout the month prior to the announcement of the price reduction. This legislation further prohibits a price reduction from lasting for more than a month and provides that announcements of price reductions may not last for less than a day.
The European Court of Justice considered that these national rules, which place a general prohibition on practices not referred to in Annex I to Directive 2005/29, without providing for an individual analysis as to whether the practices are ‘unfair’ in light of the criteria laid down in Articles 5 to 9 of that Directive, are not permitted under Article 4 thereof.
French rules on price reduction were, before March 11, 2015, quite equivalent to the Belgium rules that have been challenged by the European Court of Justice, in particular the use of a reference price assessed on the 30 last days before the announcement of the price reduction.
Indeed, before the enactment of the Arrêté of March 11, 2015, discounts, or price reductions, were allowed in France subject to the specific regulations set forth by an Arrêté dated December 31, 2008 (no longer in force as of March 11, 2015) according to which the trader’s previous price serving as a comparison (prix de référence) must be displayed when marking a promotion and it may not be higher than the lowest price offered by the trader for a similar product during the previous 30 days.
As a result, as of March 11, 2015, the following rules are those applicable to price reductions in France:
- The trader still has to inform the consumer of the reduced price and the reference price through the use of the labeling or the marking of the price (rule unchanged);
- The trader is allowed not to indicate the reduced price but the percentage of reduction instead, calculated with the reference price, if the percentage applies to an identified category of product (e.g., up to 50% on shirts) and if the consumer is informed that the reduction will be made at the cash desk (rule unchanged);
- The trader has no longer the obligation to use, as the reference price, the lowest price offered by him during the previous 30 days; but the trader must be able to provide justifications in the event the calculation of the reference price is challenged (new rule).
This new rule is not likely to be easier to enforce than the previous one, insofar as the assessment of whether or not the reference price has been fairly calculated will be made, on a case by case basis, under the principles set forth by Articles 5 to 9 of the aforementioned Directive, so that the traders/advertisers will have to be very careful at the time of the calculation of their reference prices.
This could lead the traders to continue using the old rule of the 30 day reference price.
1Case law of the Court of Justice, C 421/12
