Using strike prices in line with competition

Strike prices are among the classics in the Competition law. It is simply tempting to advertise with (supposedly) large discounts. But what is legally permitted?

Price cuts are a popular means in retail to increase customers' desire to buy. They suggest a price advantage to the customer, which is intended to persuade them to make a purchase decision. But what many retailers don't know is that markdown prices can quickly become a warning trap. Competition law risks lurk if price comparisons are not stated correctly. In this article, we use a recent warning letter to show you what you need to bear in mind when advertising with strike prices in order to be on the safe side legally.

Communicating price reductions correctly requires a keen sense of the legal requirements. In particular, compliance with the Price Indication Ordinance (§ 11 PAngV) plays a central role here. In the following sections, you will learn how to use strike prices correctly and avoid warnings.

Advertising with opposite own prices

Retailers often advertise their own previously charged prices. The new price is compared with an earlier, higher price, which is crossed out. This is generally permissible, as retailers are free to set their own prices. It is important that the price reduction is made public.

However, this practice is subject to certain restrictions. According to § 11 PAngV, the lowest total price of the last 30 days must serve as a reference for price reductions. This is intended to prevent consumers from being deceived by misleading price information. In particular, it prevents the practice of briefly raising prices shortly before Black Friday in order to then advertise huge discounts.

Requirements of the Price Indication Ordinance (PAngV)

Since May 2022, Section 11 PAngV stipulates that the lowest total price of the last 30 days must be used as a reference for price reductions. This regulation is intended to improve consumer information and ensure that unrealistic reference prices are not used.

There is no further obligation to explain that the reference price is the lowest of the last 30 days. The focus is on preventing moon prices and communicating clear, comprehensible price reductions.

Avoidance of misleading information

Misleading advertising exists if the previous price was never seriously demanded or if a price reduction is feigned through price gimmicks. The crossed-out price must always be the lowest price actually demanded in the last 30 days.

The duration for which a price was requested also plays a role. Excessively short periods or outdated prices can also be misleading. The Federal Court of Justice has determined that the permissible time period must be assessed individually, depending on the sales medium and product. In online retail, this period is generally shorter than in stationary retail.

Examples from case law

• Long-term advertising in online retailA price advertised as "now only" that is valid for more than four weeks was deemed inadmissible (LG Munich I, judgment of 01.04.2010, Ref. 17HK O 19517/09).
• Short-term advertising with everyday goodsA "price in lieu" that was demanded over three months ago was also inadmissible (LG Bochum, judgment of 24.03.2016, Ref. I-14 O 3/16).
• Long-term advertising with durable goods: A six-month price display in the online store was considered justifiable if the price was requested immediately beforehand (LG Bielefeld, judgment of 01.09.2020, Ref. 15 O 9/20).
• Long-term advertising with sporting goodsA strike price that had not been demanded for more than six months was misleading (OLG Nuremberg, judgment of 19.12.2023, Ref. 3 U 2007/23).

Conclusion

Retailers can continue to benefit from the attractiveness of strike prices as long as they comply with the legal requirements. In particular, compliance with Section 11 PAngV is crucial in order to avoid warnings. The lowest price of the last 30 days must be used as a reference and the price comparison must not be misleading.

In particular, avoid price gouging and make sure that the crossed-out price was actually requested. Correct and transparent price information creates trust among customers and protects against legal consequences.