ACM intervenes: Advisory prices under scrutiny

ACM intervenes: Advisory prices under scrutiny

ACM has, quite inconspicuously, started enforcing the rules regarding prices and discounts much more strictly last month. Consumers must be better protected against misleading price information, and this means a new approach for (online) sellers.

European rules: the big picture

Since the end of the last century, we have had regulations in Europe regarding the clear display of prices. For instance, sellers are obliged to clearly state both the selling price and the unit price. This makes it easier for consumers to compare prices and also protects consumers from hidden costs.

This legislation was tightened in 2021. The update of this directive mainly affects how price reductions are displayed in shops, leaflets, brochures and online, for example.

In the case of a discount, the ‘reference price’ - the lowest price in the past 30 days - must be clearly stated. This prevents retailers from using artificially high prices to make discounts look more attractive. There are exceptions for rapidly perishable goods and products with continuously falling prices.

What has changed in the Netherlands?

The ACM indicated last month that it interprets and enforces this legislation very strictly in the Netherlands. In doing so, the body said it would focus specifically on recommended retail prices.

Many companies listed these prices as a point of comparison to highlight discounts, even if they were not the lowest price in the past 30 days. According to the ACM, this leads to deception, which is why the following restrictions now apply:

• No more crossed-out recommended prices.
• No mention of discount percentages based on recommended prices.
• No comparisons in euros, such as ‘€40 cheaper than the recommended retail price’.

• Always explain directly what the recommended retail price means, without using an ‘i’ icon.

These rules also apply to other terms such as ‘average price’ or ‘usual price’. Clarity is mandatory: what do you mean by it, and how is the price constructed?

A good example is Amazon.co.uk, this website currently goes wrong on all counts.

What is still allowed?

It is allowed to mention a recommended price or an average price of competitors, as long as you do not suggest a discount. For example:

• Recommended price: ‘The price recommended by the manufacturer’ = €120, our price = €90.
• Competitors' average price = €95, our price = €80.

This way, consumers can still make a comparison, but without giving the impression of a non-existent discount.

What does this mean for retailers?

For many retailers, especially online, this means a big adjustment. Where it was previously common to cross out recommended prices and communicate large discount percentages, full transparency is now the norm. Dutch e-commerce association Thuiswinkel.org warns that the impact is huge and argues for a transition period.

However, the ACM remains steadfast: misleading price indications are strictly monitored, and violations can lead to hefty fines. This means that entrepreneurs must now seriously invest in honest and clear communication. 

Conclusion

These stricter regulations put consumers first. Prices are becoming more transparent and fair, but for sellers this brings challenges.