In its judgment dating from December 10, 2009 (file no. I ZR 195/07 – the complete judgment is not available yet), the I. Civil Court of the German Federal Court of Justice, inter alia responsible for actions in unfair competition, decided that advertisement with a price deduction of 19 percent constitutes unfair competition if it is not clear and unequivocal from the advertisement itself that such price deduction will only be granted on goods in stock in the shop.

Plaintiff and defendant are competitors in the area of trade with photo and video cameras and respective accessories. In its brochure the defendant advertised: “Only today, January 3, photo and video cameras without 19 percent VAT*” (“Nur heute 3. Januar Foto- und Videokameras ohne 19% Mehrwertsteuer*”). The footnote with asterisk contained the following: “Save a full 19 percent on the retail price” (“Sparen Sie volle 19% auf den Verkaufspreis”). Two employees of the plaintiff visited the defendant’s premises January 3 and received a 19 percent discount on the retail price upon purchase of a camera. When asked whether this camera could also be ordered, a sales representative of the defendant confirmed this but informed the two employees that the price deduction will only be granted on cameras in stock in the shop January 3.

The plaintiff sued the defendant for injunctive relief, determination of obligation to pay damages, and information, and prevailed on all counts in the lower instances. The Federal Court of Justice is of the same opinion and dismissed the defendant’s appeal. The advertised price deduction constitutes a sales promotion and, as such, must clearly and unequivocally identify the conditions for its applicability already in the advertisement. The defendant’s advertisement does not satisfy these criteria. The consumer must be able to inform himself in advance on the conditions that the advertising company has set forth for claiming the price deduction in order to be able to make an informed purchase decision. The fact that an announced price deduction cannot be granted on goods that can be ordered but are not (any longer) available in the shop forms part of such decisive criteria. Such a restriction must be announced in the relevant advertisement already in order to satisfy the transparency requirements stipulated by the law.

The decision of the Federal Court of Justice clearly shows that companies need to continue to apply due consideration to the design and creation of advertising, and need to take into account that seemingly minor details need to be mentioned to satisfy the obligation of transparency.