In a judgment dated 10 July 2014 (C-421/12) the Court of Justice has decided that the Belgian rules on announcements of price reductions are irreconcilable with the European Directive on unfair practices.
The European Commission had brought an action before the Court of Justice against the Kingdom of Belgium, because it is of the opinion that Belgium has failed to correctly implement the Directive on unfair practices (Directive 2005/29/EC, hereinafter the "Directive") in several respects. Previously, the Commission had sent a formal notice to Belgium. The action related, amongst other things, to the Belgian rules on the announcement of price reductions (articles 20, 21 and 29 of the Act of 6 April 2010 on market practices and consumer protection, hereinafter the "Market Practices Act"). In the meantime, these provisions have been replaced by articles VI.18, VI.19 and VI.26, §2 and §3 of Book VI of the Code of Economic Law, which entered into force on 31 May 2014. The content of these articles is largely unchanged.
Pursuant to articles 20 and 21 of the Market Practices Act (now articles VI.18 and VI.19 of the Code of Economic Law), the freedom of traders to announce price reductions is very limited: this is only allowed if the new price is lower than the reference price, which is the lowest price set by the trader during the month immediately prior to the first day for which the new price is announced. Moreover, the trader has to mention this reference price in the announcement of price reduction or give information on the basis of which the consumer can immediately and easily calculate that reference price. Further, these provisions also prohibit, with a few exceptions, the announcement of price reductions for a period of more than one month or less than one day.
Article 29 of the Market Practices Act (now included in article VI.26 §2 and §3 of the Code of Economic Law) contains a similar rule for announcements of price reductions in the framework of the sales period. If the item that is offered in sales was sold in the same point of sale or via the same method of sale during the month prior to the sales period, the price must be lower than the reference price, which is the lowest price set by the trader during the month immediately prior to the period of sales. In all other circumstances, the reference price is the lowest price previously applied by the trader in a sales point or via a method of sale.
The Court of Justice decided that the announcement of price reductions is a trade practice and consequently falls within the scope of the Directive. Since the Directive has effected a complete harmonisation of the rules concerning unfair trade practices of traders vis-à-vis consumers, Member States cannot impose measures with respect to the economic reality of announcements of price reductions which are more restrictive than those laid down in the Directive, even if these measures aim at ensuring a higher level of consumer protection.
The Directive contains an exhaustive list of trade practices which are to be deemed unfair "in all circumstances". The practices covered by the Belgian rules on announcements of price reductions are not mentioned in this list. Consequently, the Belgian legislator cannot impose a general prohibition on announcements of price reductions that do not meet the conditions listed in articles 20, 21 and 29. Trade practices that do not appear in the exhaustive list can only be assessed in the light of the specific circumstances of the particular case. In order to verify whether an announcement of a price reduction is valid, one must assess on a case-by-case basis whether the announcement is unfair according to the criteria of the Directive (see also article VI.93 et seq. of the Code of Economic Law).
As a consequence of the judgment of 10 July 2014, the Belgian courts must disregard, amongst other things, articles 20, 21 and 29 of the Market Practices Act, now articles VI.18, VI.19 and VI.26, §2 and §3 of the Code of Economic Law. Therefore, it is possible to make an announcement of a price reduction that does not meet the conditions listed in these articles.