2.4.3. General misleading information

Misleading price information and the use of recommended retail prices

Article 6 prohibits misleading actions which are capable of deceiving the average consumer on a wide range of elements including "the price or the manner in which a price is calculated, or the existence of a specific price advantage" (para 1(d)).

Under Article 6(1)(d), price information should not contain false information and be therefore untruthful or should not deceive or be likely to deceive the consumer in any way, including in the overall presentation, even if the information is factually correct.

Recommended retail prices are prices that the manufacturer or another party in the supply chain recommends that the retailer sells a product for. Under competition law recommended retail prices are questionable and can be used as indirect means to achieve resale price maintenance, which is a prohibited practice[49].

Under the Directive, recommended retail prices may contravene Article 6(1)(d) given that they are often illusionary. This can happen when traders use unreasonably high recommended retail prices for the purpose of price comparisons and, as a result, give consumers the impression that they are offering them a significant discount. Experience shows that very often recommended retail prices are not implemented, especially in markets where there is a healthy competition between retailers, who remain free to depart from the manufacturer's recommendation and to implement a price that can be substantially lower (or higher) than the recommended one.

Drawing on national experience in this area, it is worth noting that certain national guidelines and codes suggest that the main criteria for assessing whether a price comparison is misleading or not lies in the possibility of showing that a recommended retail price is in line with the general market price for the product or has been applied in the market for a significant period of time, or both.

Some examples from the guidelines of the Finnish Consumer Ombudsman

Recommended retail price (RRP)

The recommended retail price means the price that the manufacturer or a previous level in the supply chain recommends and that the consumer is generally charged for the same product. (Market Court 1982:19, 1989:7)

Comparison with the general price level

When a retail shop compares its own prices with the recommended retail price, it is a question of comparing its own prices with the general price level. It is misleading for a retail shop to call its own selling prices the recommended retail prices.

When it is not a case of advertising a reduced price, a retail shop may only compare its own sales price with the product's recommended retail price if a consumer is actually charged the recommended retail price for a similar good in another retail shop (Market Court 1982:19, 1989:7).

If a retail shop uses a comparison of this kind, it must be able, if necessary, to demonstrate by means of a price survey, at local level at a minimum, that consumers are genuinely charged the recommended retail price, and that it corresponds to the general price level.

UK, DTI Pricing Practices Guide

Price comparisons generally

1.1.1. If you choose to make price comparisons, you should [ ] be able to justify them, and to show that any claims you make are accurate and valid - in particular, that any price advantage claimed is real.

1.1.6 Use of initials or abbreviations to describe the higher price in a comparison should be avoided except for:

(a) the initials "RRP" to describe the recommended retail price; or

(b) the abbreviation "man. rec. price" to describe a manufacturer's recommended price.

You should write all other descriptions out in full and show them clearly and prominently with the price indication.

1.1.7 Sections 1.2 to 1.6 of this Guide give advice on particular types of price comparison.

1.6 Comparisons with "Recommended Retail Price" or similar

1.6.1 You should not use a recommended retail price, or similar, as a basis of comparison which is not genuine, or if it differs significantly from the price at which the product is generally sold.

1.6.2 You should not use an "RRP" or similar for goods that only you supply.

1.7 Pre-printed prices

1.7.1 Reductions stated on the manufacturer's packaging (e.g. "flash packs" such as "10p off RRP") should be passed on to consumers.

1.7.2 You are making a price comparison if goods have a clearly visible price already printed on the packaging which is higher than the price you will charge for them. Such pre-printed prices are, in effect, recommended prices (except for retailers' own label goods) and you should have regard to section 1.6.

Footnotes

[49] See Commission Regulation (EC) 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices [1999] OJ L 336, 21-25 and Commission Notice Guidelines on Vertical Restraints [2000] OJ C 291, 1-44. In particular para 48, 223-225.

Links to articles of the Directive

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