In early December 2022, the Dutch government published new rules on price reductions through so-called 'from-for discounts', implementing obligations from the European Omnibus or Modernisation Directive. The new rules will enter into force on 1 January 2023.
The new rules combat misleading discount promotions in the Dutch market place and stipulate that the original price from which the discount is deducted (i.e. the "from price") must be the lowest price used by the seller 30 days prior to the offer. A seller is no longer able to increase the price of a product for a short period of time, reduce the price and then falsely present this 'from-for price' as an offer or a significant discount.
For a comprehensive overview of the general rules, see an earlier article on the subject: Netherlands to issue new rules on price reduction announcements.
The Omnibus Directive provides for exceptions to the general rule on price reductions in certain situations, which the Dutch government has decided to make use of. Hence, the Dutch implemented rules contain the following three exceptions:
For perishable products the general rule does not apply.
Perishable products include fresh fruit, fresh fish, chilled meals and fresh flowers. From a sustainability perspective, the Dutch government considers it important that rules on price reductions help reduce food waste.
The designation of the category of perishable products covered by this exception will be made by a ministerial regulation, which is still being considered because of its detailed nature and the realisation that designation by regulation must apply to any new developments.
For products that are on the market for less than 30 days, the lowest price applies for the period the product is on the market.
New products can be offered at a discount within a 30-day period due to this exception. According to the Dutch government, this exception is beneficial for both sellers and consumers.
The general rule also does not apply for consecutive price reductions or progressive discounts: for example, a discount on a garment that is reduced first by 20%, then 30% and ultimately 50% of the original price.
The regulation states that a seller may only continue to refer to the price on which the first reduction was announced for a maximum of three months. After the three-month period, the general rule will apply. This is a change from the draft regulation as discussed in the previous Law-Now article mentioned above. In the draft regulation, there is no defined period when progressive discounts are possible.
According to the government, a defined period (i.e. of three months) provides clarity to consumers and promotes the enforceability of this provision. Furthermore, a three-month period is sufficient to allow sellers to sell their 'old' stock (e.g. last season's collection).
The official explanation advises that in the case of successive price reductions, retailers should state the date that the price was in effect prior to the first reduction. This offers consumers clarity on the duration of the discount promotion.
Consumer and market authority
The Netherlands Authority for Consumers and Markets (ACM) will supervise the correct implementation of the new rules by companies and will oversee enforcement in case of violations.
In a press release, the ACM has already announced that they will start enforcing the rules immediately from 1 January 2023. There will be no transition period.
If the ACM establishes a violation, it can impose a fine of up to EUR 900,000 per violation. In some cases, fines can be even higher: 1% of a company's annual turnover.
The new rules on price discounts will take effect from 1 January 2023. As these rules are based on the Omnibus Directive, which has been in force from 28 May 2022, there will be no transition period. From 1 January 2023, the ACM will actively enforce these new rules. Therefore, it is important that companies implement these new rules on discounts as soon as possible or face the possibility of a high fine.