Price reductions
What are your legal obligations as a business when making price reductions?
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.
What legal requirements must your business adhere to when making price reductions?
- 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 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.
You can download a PDF of the full guidelines below.
Which businesses have to apply?
- 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?
You must identify the lowest price applied for the good during at least the last 30 days before applying the price reduction.
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.
When to use the prior unit price
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.
What are the rules relating to prior price and sales campaigns?
Successive reductions as part of the same sales campaign
- 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
Separate sales campaigns within 30 days
What are 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.
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.
What price promotions are exempted?
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.
