Price reductions
Guidelines
If you are a business that sells goods, from 29 November 2022 you have new obligations when making price reduction announcements. These new obligations were introduced under the European Union (Requirements to Indicate Product Prices) (Amendment) Regulations 2022 (Amending Product Pricing Regulations). In simple terms, a price reduction announcement is a promotional statement by a seller that it has reduced the price of goods.
The biggest change concerns the transparency of price reductions. You must now provide specific information when announcing a price reduction, in particular by including the ‘prior price’.
These changes ensure that promotional announcements about price reductions are genuine. Businesses that do not comply could be subject to enforcement action by the CCPC.
Overview
When making price reduction announcements you must:
- Show the prior price of a good in the price reduction announcement. This is defined as the lowest price, or unit price (where applicable), applied in the previous 30 days before the price reduction was applied
- Base any reduction amount on the prior price
- Ensure the announcement is:
- easily identifiable as referring to the relevant goods
- clearly visible
- easy for consumers to read
- In the case of a sales campaign where there are successive reductions in the price, the prior price you show should be the lowest price before the first of the price reductions was applied
All businesses who sell to EU consumers, including those offering goods via platforms, must comply with the new legal requirements. You must comply with all of the obligations in all distribution channels, such as in-store and online
The obligations apply to businesses that sell goods to consumers. They also apply to businesses who sell goodson behalf of other businesses. They do not apply to services, including digital services and content.
The new regulations do not include a definition of a “good” and instead refer to “products”. The CCPC recommends businesses use the definition of a “good” in the Consumer Rights Act 2022 when considering which of their goods the new price reduction regulations apply to.
Which businesses have to comply?
The obligations apply to a business that is the party in a contract with the consumer. This means the seller of the goods, and includes sellers using intermediaries (for example online marketplaces).
The obligations do not apply to:
- Intermediaries that only provide the means for businesses to sell their goods. For example, online marketplaces.
- Intermediaries that only aggregate and display information about the prices of other sellers. For example, price comparison platforms.
What is the prior price?
The prior price is the lowest price, or unit price (where applicable), applied to a product no less than 30 calendar days before applying a price reduction.
The day the price reduction is applied is NOT counted as part of the 30-day period.
You must identify the lowest price applied for the good during at least the last 30 days before applying the price reduction.
| Example |
| A shop wants to make a price reduction announcement, and apply a price reduction announcement on 28 July for a hair dryer. It charged €45 for a hairdryer from 28 June to 15 July, then increased the price to €50 from 16 July to 24 July, further increasing the price to €55 from 25 July to 27 July – then €45 is the prior price. |
You are not required to say how long the prior price had been applied for. If a price reduction lasts longer than 30 days, the prior price is still the lowest price at least 30 days before the reduction was applied.
Under the Consumer Protection Act 2007, if you have stock with reduced prices, you have to have had the products on offer at the advertised original price for a reasonable period before the price was reduced.
The definition of “a reasonable time” is not specified by law, but the CCPC’s view is that an accepted practice would be to allow the reduced price for only so long as the product had been at the elevated previous price. For example, a product for sale at €100 for four weeks should only be advertised at the reduced price for no longer than four weeks.
You must base the reduction calculation on the prior price.
| Example |
| A laptop cost €550 on 1 October, and increased to €600 on 15 October. The shop announces 20% off the laptop from 29 October. In this announcement, the shop must outline the prior selling price. This will be the lowest price applied in the 30-day period before the reduction is applied (€550). They must also base the reduction calculation on this price (20% of €550). |
When to use the prior unit price
You may use the prior unit price if the selling price cannot be calculated until the consumer indicates how much they need. For example, if a consumer is buying fabrics or loose food items.
Selling price: the final price in euro, including VAT and taxes, for a unit of a good, or a given quantity of a good.
Unit price: the final price in euro, including VAT and taxes, for a unit of measurement, for example per kg, litre. For some goods, the unit of quantity is different, for example the unit of quantity for wine is 75cl.
Prior price and sales campaigns
Successive reductions as part of the same sales campaign
If you apply successive reductions one after the other as part of a sales campaign, you must use the lowest price in the 30 days before the first reduction as the prior price.
- You must gradually reduce the price without interruption
- It must be part of the same sales campaign
- The prior price is the same for all price reduction announcements during the campaign
| Example |
| The lowest price of a duvet in the 30 days before the sales campaign started was €40. The shop shows €40 as the prior price when it announces the first reduction, 10% off. They must use the same prior price when announcing and applying successive reductions of 20% and 30%. |
Separate sales campaigns within 30 days
The general obligations apply to separate sales campaigns that take place during a 30-day period. For example, “every Sunday in January, 10% off pillows” or sales campaigns that follow each other such as Black Friday, Cyber Monday or Christmas sales.
This means the prior price for each separate price reduction is the lowest price during at least the previous 30 days. This includes price reductions during the previous promotions.
| Example |
| Laptop price 20 September–14 November = €1,500 Laptop price 15 November–24 November = €1,800 20% discount announced for Black Friday Prior price = €1,500 Laptop price on Black Friday (25 November) with 20% discount applied = €1,200 Laptop price returns to €1,800 from 26-27 November A new sales campaign for Cyber Monday is announced – 20% discount. Prior price = €1,200 Laptop price on Cyber Monday (28 November) with 20% discount applied = €960 |
Price reduction announcements
You must state the prior price in all price reduction announcements. A price reduction announcement is any promotional statement made by a seller outlining that it has reduced prices for goods.
For example:
- Percentage discounts or reduced amounts such as “20% off” or “€10 off”
- Showing a new lower price with the previous price such as “was €150, now €100”
You must comply with the obligations even when a price reduction announcement does not include a measurable reduction. For example, “sales price” or “special offers”.
Specific good vs general price reduction announcements
The new obligations apply to price reduction announcements for a specific good on offer. There is a difference in your obligations in the case of price reduction announcements made by general statements.
Price reduction announcements can be made in various forms, including on the radio and television. They can also include:
- A reference to a specific good on offer, or
- General statements such as “20% off everything”
In an announcement about a specific good on offer, the prior price must be included. In a general price reduction announcement, the prior price does not have to be included in the announcement itself. However, you must show the prior price for the individual goods on price tags in shops or online.
A general price reduction announcement can also outline different discounts for different categories of goods. You must clearly show the different price reductions for each category.
For example, “30% off red plant pots and 40% off green plant pots”.
When indicating the prior price of individual goods covered by a general price reduction announcement, there are two possibilities:
- In the past 30 days, you have not increased the price of individual goods and have not applied any other price reductions:
The prior price is the previous selling price of the goods. You will not need to change price tags or online information for the relevant goods. - In the past 30 days, you have increased a price or applied another price reduction. The selling price indicated on the tag or online cannot be used as the prior price as it will not be the lowest price in the past 30 days.
You will have to adjust the relevant price tags or online prices for the goods covered by the general price reduction announcement.
General price reductions – group advertising
A central entity like a franchisor may advertise price reduction announcements on behalf of its members. This is called group advertising. However, each participating business is responsible for ensuring it displays the correct prior price for the relevant goods.
If a participating business has kept its prices the same in the 30 days before the price reduction is to be applied, they do not need to adjust the individual prior prices.
If this is not the case for goods featured in the campaign, the business must adjust the prior prices. This includes if they reduce the price of goods themselves followed by a reduction campaign by a central entity within 30 days
| Example |
| A shop selling a vacuum cleaner announces a flash sale of 40% off the vacuum cleaner for one weekend in March (4-6 March). Price of vacuum cleaner on 8 February (30 days before the price reduction is applied) = €500 Price of vacuum cleaner on 4-6 March = €300 The price of the vacuum cleaner returns to €500 on 7 March. Franchise group advertising campaign launched 10 March announces a 20% reduction on the vacuum cleaner from 10-15 March. The individual shop must use the prior price of €300 on price tags or online, and sell the vacuum cleaner at €240 (20% reduction). |
When making price reduction announcements, businesses can:
- Use the lowest price applied to a good in a period longer than 30 days as the prior price
- Include references to other prices when announcing a price reduction. This is as long as they are clearly explained and do not distract consumers’ attention away from the prior price. For example, “was €100, now €80, our lowest price in 3 months.”
- Extend a reduction as long as it is clear to consumers that it is not a new campaign
Exempted price promotions
These obligations are focused on price reduction announcements. This means they do not apply to the following:
- Long-term price reduction arrangements and specific individual price reductions.
For example:- loyalty programmes (discount cards or vouchers)
- personalised price reductions (consumer birthday reductions, 10% off voucher on purchase).
- However, they do apply when making announcements that appear personalised but are in fact offered to consumers in general.
- For example, if you make available discount codes or vouchers to potentially all consumers visiting a store or shopping online during a specific period
- Price changes that do not involve a price reduction announcement. The prices of goods can change at any time, and you are free to set them at whatever rate you wish. However, the new obligations apply when there is a price reduction announced.
- Marketing that compares offers made by different businesses. This also applies to price comparisons with other businesses, as long as the marketing does not create the impression of a price reduction.
- Other techniques of price promotion that are not reductions. For example, conditional offers (10% off when you buy two, or buy one/get one free).
What happens if a business does not comply?
Businesses that do not comply could be subject to enforcement action by the CCPC, such as criminal prosecution or issuing a fixed payment notice. The CCPC will monitor compliance with these Regulations, and investigate suspected breaches. In order to demonstrate compliance, the CCPC strongly encourages businesses to preserve records substantiating the pricing promotion.
Penalties
It is an offence to breach these Regulations, and businesses who do so may face a Class A fine. When determining what amount to fine an offending business, a court will consider factors such as the nature, gravity, scale and duration of the breach.
What is the status of these guidelines?
These guidelines reflect the views of the CCPC as of November 2022. The CCPC reserves the right to amend this guidance as necessary.
These guidelines do not constitute legal advice. A business must decide whether its conduct and/or that of its staff, complies with consumer protection law. However, these guidelines will help businesses in making that assessment. If a business has doubts about whether or not its conduct complies with the law, they should seek independent legal advice.
Download a printable PDF of these guidelines.
FAQ
The CCPC will consider queries from traders in the context of our Price Reduction guidelines. Specific questions can be sent to communications@ccpc.ie.
All relevant questions received will be published on our website as received and the details of the submitter will be anonymised. Please ensure you are happy for each question in full to be published. Questions outside the scope of Price Reductions guidelines will not be published.
Responses to questions will be published on this page at particular intervals. Please note that the CCPC cannot provide legal advice to individual businesses on their trading practices.
Questions on Prior Price and successive reductions
Question 1
I am seeking some specific clarity on online price display and am seeking clarity on the interpretation of the guidelines with a specific example;
- Price as at 1st September 2022 – €700
- Price reduced on 1st November – €500
In this example, the price displayed would be
- Was €700 now €500
Then on 1st January the price is marked down further to €300.
In order to comply with the legislation should the markdown be displayed as;
- Was €700 Now €300
- Was €700 Then €500 Now €300
- Was €500 Now €300
Question 2
In terms of how a retailer words a new further discount:
If we are at full price say for 30 days in March and start a Spring Event in April where we can show our was and now . Under the umbrella of the Spring Event can we have a mini promotion offering a further 10% off for a limited number of days around the BH at the end of April / start of May.
Example:
5ft mattress MRP €1000 starting Feb 28th and until March 28th
On March 29th it goes to was €1000 now €799 and this is planned to run up to May 1st.
We need to know can we within this period offer a further 10% off sale price for the last week of April so it would be ‘was €1000 now €799 plus a further 10% off sale price’
Obviously the key message is once the further 10% is off the €799 price, not the original was price. Do they need to have the new NOW price?
The prior price used in a price reduction announcement must be the lowest price applied to a product during the period of not less than 30 days before the price of the product was reduced. However, where successive reductions are gradually applied one after the other, without interruptions, as part of the same sales campaign, it is permissible to show the lowest price applied in the 30 days before the first price reduction was applied.
An example of this can be found under the ‘Prior Price and Sales Campaigns’ section on page 8 of our business guidelines – ‘The lowest price of a duvet in the 30 days before the sales campaign started was €40. The shop shows €40 as the prior price when it announces the first reduction, 10% off. They must use the same prior price when announcing and applying successive reductions of 20% and 30%.’
| Prior Price (lowest price in the 30 days before the sales campaign): €40 | ||
| Reductions in same sales campaign | Reduction applied | Discounted price* |
| 1st Reduction | 10% off | €36 |
| 2nd Reduction | 20% off | €32 |
| 3rd Reduction | 30% off | €28 |
| (*) The discounted selling price must also be displayed | ||
For more information about sales campaigns and the duration of price reduction periods, please see pages 6 to 8 of our business guidelines.
Questions on references to the Recommended Retail Price (RRP)
Question 3
I have a query about the use of recommended retail prices. In prior instances, some retailers would show the following example;
Was €500 now €250 – where €500 was the RRP. It is my understanding and advice that this is NOT compliant with pricing directives as the product has never been sold by the retailer at €500.
If the retailer wishes to use RRP as an anchor price, then the correct treatment of this should be
RRP €500 Our Price €259
Question 4
We have received queries regarding the use of ‘recommended retail prices’ (“RRP”) displayed above the selling price of a product. No additional promotion is used, such as different colouring or strikethrough pricing. Is this likely to be considered a promotional activity and therefore subject to the above mentioned regulations?
Question 5
CCPC guidelines state:
“What is the Prior Price” – “You must identify the lowest price applied for the good during at least the last 30 days before applying the price reduction.”
Query: Can the RRP be considered as the prior price?
The new regulations do not contain specific rules for the practice of displaying the recommended retail price (RRP). Please note, however, that in addition to the new rules on price reduction announcements, the Consumer Protection Act 2007 also contains a number of provisions around unfair and misleading commercial practices that may apply.
Traders comparing their prices with the RRP, whether or not in combination with price reduction announcements, must pay utmost attention to ensure that consumers are not misled.
If the RRP is not the prior price (i.e. the lowest price at which the goods were offered for sale in the previous 30 days before the price reduction was announced) and a trader makes a price reduction announcement, then the trader must clearly differentiate between the RRP and the prior price.
If a reference to an RRP is included in a price reduction announcement, this must be clearly explained, must not create confusion and must not detract the consumer’s attention from the indication of the prior price.
When a consumer looks at a sale announcement they must be able to easily evaluate the price and understand the level of discount compared with the prior price. Where, due to its misleading presentation, a comparison with the RRP is actually perceived by the average consumer as being a price reduction, such practice may be in breach of both the new regulations, due to the incorrect presentation of the prior price, and the Consumer Protection Act 2007.
Question on promotional statements & price reduction announcements
Question 6
CCPC guidelines state:
“Price Reduction Announcements” – “A price reduction announcement is any promotional statement made by a seller outlining that it has reduced prices for goods”.
Is the term “Special Buy €50” considered a price reduction announcement?
Announcements that create the impression of a price reduction are subject to the new rules, even when the price reduction announcement does not include a measurable price reduction. For instance, the new obligations apply to announcements such as “sale price” or “special offer”. In such cases, the prior price has to be indicated for the goods concerned by the announcement.
In a general price reduction announcement (e.g. 20% off on all Christmas decorations this week announced on a physical banner or online communication), the prior price does not have to be indicated on the same medium as the price reduction announcement itself. However, the individual goods covered by the announcement must display the prior price i.e. on the respective price tags in shops or price sections in online shop interfaces
Question on sales periods
Question 7
What constitutes a sale period? For example, if we receive in a ladies coat on 1st September…it is an Autumn coat…if we reduce the coat for our Autumn sales on 10th October and continue to reduce the coat until the end of the season – is that one sale period…or is the sale period the duration of the specific time frame for the Autumn Sale?
If the coat was first reduced on the 10 October for the first time, then this would be considered the beginning of the price reduction campaign.
If the price reduction of the coat was applied on the 10 October, then the prior price of this coat in this price reduction announcement will be the lowest price applied in the previous 30 days. If traders continue to make successive reductions, without interruptions, to the price of the coat, then the prior price shown should be the lowest price in the 30 days before the first reduction was applied.
When making price reduction announcements, trader can extend a reduction to a good as long as it is clear to the consumers that it is not a new campaign.
As noted on page 6 of our business guidelines, you are not required to say how long the prior price had been applied for. If a price reduction lasts longer than 30 days, the prior price is still the lowest price at least 30 days before the reduction was applied. Please note that under the Consumer Protection Act 2007, if you have stock with reduced prices, you have to have had the products on offer at the advertised original price for a reasonable period before the price was reduced.
The definition of “a reasonable period” is not specified by law, but the CCPC’s view is that an accepted practice would be to allow the reduced price for only so long as the product had been at the elevated previous price. For example, a product for sale at €100 for four weeks should only be advertised at the reduced price for no longer than four weeks.
Question on individualised price reductions
Question 8
Motor dealers would sometimes give individualised discounts to their customers as part of the deals they make (dependent on trade-ins, etc). Is it sufficient for the retailer in this instance to note the previous price to the customer on a contract (for example)?
The new regulations focus on promotional statements in respect of goods offered for sale to consumers, where the trader makes a price reduction announcement to customers in general. It does not cover, however, individualised or personalised price reductions which are dependent on a negotiation with the individual customer or on other circumstances which have not been announced in advance.
If the individualised price reduction is exclusive to one customer and has not been announced to customers in general, then it is likely that this would fall outside the scope of the new regulations. On the contrary, the new rules apply to announcements that create the impression of a price reduction, even in instances where the price reduction announcement does not include a measurable price reduction. For example, the new rules apply to announcements such as “sale price” or “special offer”. In such cases, the individual goods covered by the announcement must display the prior price i.e. on the respective price tags.
Question on price reduction lasting longer than 30 days
Question 9
If a trader has an item on offer for a certain price for over 30 days, can they then reduce it for a period of longer than 30 days using the initial price as a reference “prior price” point?
For example, if a bed is on offer for €3000 for two months, can it then be put on sale for six weeks at €2,000 using the €3,000 as the prior price? For some products sales reductions may last extended periods.
If the lowest price of the bed was €3,000 in the 30 days before the sales campaign, then the prior price shown will be €3,000 when announcing the price reduction of the bed to €2,000.
If the price reduction lasts longer than 30 days without interruption, the prior price to be indicated remains the lowest price applied during at least 30 days before the price reduction.
For example, a bed on offer for €3,000 for two months can be put on sale for six weeks at €2,000 using the €3,000 as the prior price, if €3,000 was in fact the lowest price applied during at least 30 days before the price reduction.
Please note that excessively long price reduction periods in comparison with the time when the good is sold at the ‘full’ price may constitute a misleading commercial practice. The CCPC’s view is that an accepted practice would be to allow the reduced price for only so long as the product had been at the elevated previous price.
Note also that where a trader continues to make successive reductions – without interruption – to the price of the bed, then the prior price shown should be the lowest price in the 30 days before the first reduction was applied.
