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ACM wishes to ban fake discounts when stricter rules come into effect

With the advent of new rules, the Netherlands Authority for Consumers and Markets (ACM) steps up its oversight over fake discounts. “The norms are clear now. Discounts must be genuine discounts on the lowest prices that had been previously charged. This rule offers a solid basis for our oversight. Consumers are entitled to genuine discounts. Businesses must stop using fake discounts,” says Edwin van Houten, Director of ACM’s Consumer Department. The new, stricter rules will come into effect on January 1, 2023, for all Dutch businesses that offer products to consumers.

What will change on January 1, 2023?

Starting January 1, 2023, ACM will be charged with enforcement of the rules regarding ‘was/now’ prices. These rules apply to all forms of ‘was/now’ prices, including strikethrough pricing and percentages. What do the rules entail? The basic principle is that the discount must be given on the lowest price that was charged over a 30-day period prior to the discount. There are three exceptions:

  • Perishable products;
  • Products that have been on the market less than 30 days (in that case, it is the lowest price during the period in which the product has been on the market);
  • Progressive discounts are allowed (something is marked down 30 percent first, and then 50 percent. This is allowed for no more than three months).

For consumers, price is one of the most important factors on which they base their purchase decisions. Consumers cannot be misled with fake discounts. With these new rules, consumers are better protected, since the ‘was’ price is the lowest price during the period prior to the discount, thus making the ‘now’ price a genuine discount. Since the advent of these rules has already been known for quite a while, ACM will begin carrying out checks and enforcement actions in 2023 straight away.

ACM’s enforcement

Since it will be the authority enforcing these rules, ACM earlier this year responded to the proposed changes and to what extent ACM will be able to enforce the rules. ACM’s main criticism centered on the way in which the exception for progressive discounts was designed. That criticism was taken on board when the definitive rules were finalized. With the changes to the rules, ACM will be able to enforce the rules properly.

Concrete examples of changes as of January 1, 2023

A business raises the price of product X from 50 euros to 70 euros, and 25 days later, it starts a promotional campaign, offering 35 percent off. According to that business, the price with the discount is 45.50 euros. Under the new rules, this is not allowed. The lowest price in the past 30 days was 50 euros. That means that the discount of 35 percent must be given on that price. In this example, the actual discount was ‘merely’ 9 percent.

A business raises the prices of its products from 20 euros to 50 euros two weeks before the start of a promotional campaign. Under the previous rules, the business was able to advertise that ‘the price was 50 euros, and now 15 euros’. However, under the new rules, this is no longer allowed, and the business can only use the lowest price over the past 30 days as the ‘was’ price, which, in this case, would become ‘was 20 euros, now 15 euros’. The higher price of a couple of days earlier can no longer be used for a higher ‘was’ price. The new rules thus prevent ‘fake’ discounts.

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