1. On October 2023 new rules for the marketing of price reductions for goods entered into force. All online shops planning to advertise sales must be involved in the changes.
These rules, which are part of the price information regulation (§ 9a) during the implementation of the Modernisation Directive, require traders to disclose the pre-price of the goods when sold.
The pre-price is defined as the lowest price the product has been offered to the public for at least 30 days before the start of marketing, and includes offers to customer clubs and loyalty programmes.
INEVO arranged a seminar on 1. November to highlight these changes, where experts from the Consumer Protection Authority, Reprice and DLA Piper shared their views. The seminar will be summarised below:
Review of the price information regulation by the Consumer Surveillance Authority
The Consumer Protection Authority opened the seminar with a thorough review of the revised rules on price reductions.
They highlighted the new obligation for traders to disclose the lowest price a product has been offered to consumers during the 30 days preceding a period of sale, an adjustment from the previous six-week rule.
It was underlined that claims used in marketing must be documented, particularly in relation to sales. There is no longer a requirement to document actual turnover but it must be demonstrated that the reference pre-price is actually the lowest price the product has had.
What are the prices to be included in the calculation?
The new rules introduce a significant change: offers and prices targeted at members of customer clubs and loyalty programmes are now included in the pre-price calculation, as these are considered available to the general public.
Prices that have not been widely available can be excluded from the pre-price basis. This may include, for example, birthday discounts, student discounts or discounts to members of a local sports association. Such cases will be governed by the Marketing Act.
The advance price shall reflect the lowest price in the sales channel concerned. This means that there may be price differences between online and physical stores, and also inside the same chain.
It is permissible to step up the discount progressively during a continuous campaign period. However, as soon as a period of sale ends and a new one starts, the pre-price needs to be revised.
An example of a lowest price in the last 30 days:
Let's say a dealer wants to advertise a 20% discount on a sofa from 1. October, where the sofa previously cost NOK 20 000.
If the sofa was offered to customer club members for 15 000 kroner between 13. and 15. September, this becomes the pre-price.
The discount is thus calculated from NOK 15 000, resulting in a sale price of NOK 12 000.
Avoid misleading marketing
Consumer surveillance warned against using several reference prices in marketing, as this may confuse the consumer.
It is essential that the reference price is clearly defined and can be demonstrated as real. The advance price must be clearly indicated.
It is also important to communicate clearly the duration and extent of a campaign, so that consumers are not misled. It should be easy to understand how long a campaign is being conducted and which products are included.
See slides and more examples from the presentation of the Consumer Protection Authority here.
Reprice - A Practical Approach to the Modernisation Directive
Reprice took the scene to discuss how online shops can fit into the new rules in practice. They presented a situation in which daily price matching, changes in supplier prices and own discount campaigns create a complex pricing environment.
To gain control of this, the Reprice proposes detailed planning and use of tools such as their Compliance Monitor, as continuous warnings about non-compliance products.
They also illustrated how to carry out discount campaigns in relation to price history and presented different scenarios and how they would be assessed by the Consumer Supervision Authority.
See slides and examples of different scenarios from the Reprice presentation here.
DLA Piper’s review of the new pricing rules in practice
DLA Piper rounded the seminar with a practical review of the new pricing rules.
They clarified that actual sales are no longer necessary to establish a pre-price; it is sufficient that the product has had a specified price for at least 30 days to meet the price information requirements.
They explained that there is no longer a requirement for actual sales to establish a premium and that 30 days is a minimum requirement for price information.
The seminar highlighted the difference between general price offers and individualised customer treatment.
General prices vs. individualised customer management
The new rules include offers from customer clubs and loyalty programmes in the pre-price calculation, as these are often available to large consumer groups on simple terms. This means that exclusive discounts granted to customer club members must be included in the pre-price if the good is subsequently sold to the public.
DLA Piper pointed out that certain campaigns, such as "every six free" or "buying 2, get 50 % discount", need not necessarily be included in the pre-price calculation, as they represent a price advantage rather than a direct price reduction.
Price matching, where a dealer matches a lower price found at a competitor, is also considered an individual price advantage and not a part of the pre-price.
Individualised customer treatment includes price reductions based on a customer’s previous purchases or special offers to a limited customer group, such as special discounts.
These offers, which are not generally available and require the customer to meet certain criteria, are thus outside the scope of general price reduction.
Practical tips for setting a premium
The advance price must always be documented. This implies that online shops must have a system in place to prove that the pre-price indicated has actually been used.
The prices offered in different sales channels and geographical areas should be controlled. This may be particularly challenging for major chains operating both physical and online shops, or with several branches with different prices.
DLA Piper also advised about increasing awareness of traditional campaign periods, often occurring at short intervals, such as Black Friday and early Christmas. It is important to plan these periods carefully to ensure that the advance price is correct and in line with the new rules.
See slides and more examples from DLA Piper presentation here.
Here are all the wears from the lectures:
Lectures on price marketing (Consumer’s Supervisory Authority)
Practical approach to the Modernisation Directive (Reprice)
Lectures on price marketing (DLA Piper)