Price Labelling Act

Disclosure of Price Reductions in Webshops and Brick-And-Mortar Retail

Advertising with price reductions is a popular method to boost product sales. However, particularly in B2C retail, mandatory legal requirements must be observed concerning price labelling. In Austria, the Price Labelling Act (PrAG) specifically regulates the conditions for price disclosure. This law was recently amended by the Modernisation Directive Implementation Act (MoRUG II) in implementation of the so-called EU Omnibus Directive, introducing the practically highly relevant regulation of § 9a PrAG, which contains provisions regarding the advertising of price reductions.

In this article, we examine the currently applicable legal regulations concerning the advertising of price reductions in webshops and brick-and-mortar retail, following the amendment of the Price Labelling Act.

What is the Purpose of the Price Labelling Act?

The aim and purpose of the price labelling regulations are to prevent consumers from being misled about product prices and price reductions. By providing accurate and complete consumer information, the consumer’s position is to be strengthened through price comparison opportunities against trade and industry, thereby fostering competition.

Who Does the New Regulation of §9a PrAG Apply to?

The scope of the Price Labelling Act is limited to the B2C sector, meaning it applies only to offers from businesses directed at consumers.

The new regulation concerning the advertising of price reductions applies primarily to retailers, both in online and brick-and-mortar retail. These regulations also apply to retailers outside the European Union, provided their sales are directed at the European Union.

Intermediaries, such as operators of online marketplaces, are exempt from the scope of §9a PrAG, unless they themselves act as retailers on these platforms. Operators of price comparison platforms are also not covered by the scope of this regulation. Furthermore, the regulation of §9a PrAG concerning the advertising of price reductions applies only to the sale of goods, not to the offering of services and digital content. Additionally, there are exemption rules for perishable goods and goods with a short shelf life.

What Constitutes a Price Reduction within the Meaning of §9a PrAG?

The disclosure of a price reduction within the meaning of §9a PrAG is an advertising statement that essentially communicates that a product is now offered at a lower price than previously. The price reduction must be stated in amounts or percentages.

Price comparisons with other companies, general advertising statements such as “best price”, quantity discounts, or vouchers do not fall within the scope of § 9a PrAG. However, it should be noted that for such advertising measures, the relevant competition law regulations must be observed.

Does Advertising with a Comparison to a Non-Binding Price Recommendation (RRP Prices) Fall within the Scope of §9a PrAG?

Price comparisons with non-binding price recommendations fall within the scope of §9a PrAG if the comparison involves the disclosure of a price reduction. This is the case, for example, when the non-binding price recommendation is struck through or when advertising uses the wording “instead of RRP €19.99, now only €14.99”.

Therefore, it must be decided on a case-by-case basis whether advertising with non-binding price recommendations involves the disclosure of a price reduction. If so, the requirements of §9a PrAG must be fulfilled.

What Specific Information Must be Provided when Advertising a Price Reduction?

The regulation of §9a PrAG stipulates that when a price reduction is announced, in addition to the current price, the lowest price offered at least once within the last 30 days before the price reduction in the same distribution channel must be stated. The lowest previous price must be disclosed in the same advertising medium as the announcement of the price reduction (print, online, radio, TV, or in brick-and-mortar retail itself).

In What Form Must the Lowest Previous Price be Disclosed?

The law does not regulate in detail how the lowest previous price must be disclosed. Article 4 of the Price Indication Directive states that the price indication must, in any case, be easily legible and assignable for the average attentive observer. From our perspective, vertical prints, very small, undecipherable prints, and media breaks are not permissible, for example.

We recommend that price information in webshops be placed directly on the product page and clearly assignable to the respective product. For example, a price indication in the footer is not advisable.

Conversely, it is not necessary to state how long the lowest previous price was charged.

How should Gradual Price Reductions be Handled?

If the price reduction is implemented gradually, and the reduction is uninterrupted (i.e., without a price increase), the price that was charged for the respective product before the start of the gradual price reduction must be stated. This is particularly relevant for the sale of seasonal goods and for clearance sales.

What are the Consequences of Violating the Regulation of §9a PrAG?

A violation of the PrAG may result in an administrative penalty under § 15 PrAG.

Furthermore, there is also the possibility of legal action by consumer protection associations or competitors due to a violation of § 1 UWG (legal infringement category).