Explanation of price reductions

The rules surrounding the display of price reductions raise many questions among sellers. To provide clarity, the Dutch Authority for Consumers and Markets (ACM) has published a new guidance document. While this guidance addresses some of the most frequently asked questions, it also gives rise to new ones. In this update, we share our key takeaways from the ACM’s new guidance.

Article 5a of the Dutch Product Price Indication Decree (Besluit prijsaanduiding producten, Bpp) implements the rules stemming from the EU Directive on the modernization of consumer protection (EU 2019/2161). This provision primarily concerns standard price reductions, where a new, lower ‘reduced price’ is compared to a previous, higher ‘prior price’.

The ‘prior price’ must reflect the lowest price the seller applied during the 30 days preceding the price reduction. This rule was introduced to combat fake price reductions, where a price advantage is artificially created by briefly increasing the price before claiming a significant reduction. Consumers must have recently had a real opportunity to purchase the product at the stated prior price.

Complying with this specific rule does not automatically make a price reduction lawful. A price announcement may still be considered misleading for other reasons. For example, a price reduction must not be shown for an excessively long period, whereby ACM considers anything longer than three months to be excessive.

In practice, price comparisons often fall outside the scope of this rule. This occurs when the comparison is not made with a traditional ‘prior price’, but rather with a ‘recommended retail price’ or ‘most common price.’ Therefore, the legal framework for price announcements extends beyond Article 5a Bpp.

ACM recently published its new Guidance on price announcements and comparisons (Leidraad prijsweergave en -vergelijkingen). Using examples of commonly used pricing techniques, ACM illustrates what is and what is not allowed. The guidance covers not only Article 5a Bpp but also the broader legal context. In addition to ‘prior prices’, it addresses comparisons with ‘recommended prices’ and ‘most common prices’, using the umbrella term ‘reference price’.

According to the guidance, any ‘reference price’ must be accompanied by a clear and permanent explanation displayed directly next to the price announcement . For example, it is not sufficient to use an information icon linking to an explanation of the recommended price. The explanation must be permanently visible next to the price.

ACM also classifies ‘prior prices’ as ‘reference prices’. This could suggest that a ‘prior price’ must always be accompanied by a statement such as: “Lowest price applied here in the past 30 days.”

However, ACM has clarified that this is not strictly necessary. In the case of a classic price reduction showing only a ‘prior price’ and a ‘reduced price’, it may be assumed that the ‘prior price’ reflects the lowest price in the preceding 30 days. In such cases, a permanent explanation is not required.

Important: this only applies if the overall price announcement is not misleading. If other ‘reference prices’ (such as ‘recommended retail price’ or ‘most common price’) are shown alongside the price reduction, then an explanation of the ’prior price’ may indeed be required.

ACM’s new guidance provides sellers with tools to ensure their price announcements comply with the rules. However, the legal framework is still evolving, and the market continues to develop new creative pricing strategies. As such, compliance remains a case-by-case matter, requiring careful legal analysis of each specific situation.