The Directive relating to the indication of prices (DIP) entered into force on May 28, 2022 and will affect all merchants that are part of the European Economic Area (EEA) or that operate in these countries, but what does this new directive mean for e-commerce?
He article 6 bis of Directive 98/6/CE of the ParlameEuropean and Council meeting addresses the issue of transparency about price reductions. The objective of this regulation is through the introduction of specific rules to guarantee the authenticity of the prices offered to consumers and users. Thus, prevent traders from artificially inflating the price reference, or mislead consumers about the amount of the discount.
What does the DPI say?
In recent years, with the boom of the online channel, a lot of controversy has been created in the sales season. Many companies have been accused of raising prices before promotional campaigns such as Black Friday or Cyber Monday, in order to lower prices afterwards. With the DIP, merchants will have to indicate the lowest price at which the products were sold during at least the last 30 days before starting the promotion.
The brands that sell both in the online and physical channels will have to indicate the previous price both in the physical points and in the product page, checkout page, email communications or any other sales channel.
From Letslaw by RSM have analyzed each of the points of the regulation so that it can be better understood:
- Article 6 bis applies to promotional statements made by the seller indicating that it has reduced the price it charges for the good or goods. For example, a price reduction could be advertised appropriately, and in compliance with the regulations, considering the examples below:
- In terms of percentage (%), eg “20% discount”, or specific amount, eg “10 EUR discount”;
- Indicating a new (lower) price together with the indication of the previously applied (higher) price. The previous price may be crossed out. For example, “now 50 EUR, before 100 EUR” or “50 EUR/100 EUR”
- By any other promotional technique, such as “buy today and pay no VAT”, which informs the consumer that the price reduction is equal to the value of VAT (does not mean that VAT is not collected);
- Presenting the current price as the “starting” or similar price and indicating a higher price as the next normal price.
- Article 6 bis does not address or in any way restrict price fluctuations and price drops that do not lead to a price reduction announcement.
- Article 6 bis applies regardless of whether the price reduction announcement indicates a quantifiable price reduction. For example, advertisements such as “reduced price”, “special offers” or “Black Friday offers”, which create the impression of a price reduction, are also subject to article 6 bis and the “previous” price of the goods must be indicated to which the ad refers.
- Applies to price reduction announcements across all distribution channels (eg brick-and-mortar stores, online stores).
- It applies to the merchant who is the effective party to the contract with the consumer, that is, the seller of the goods, including sellers who use intermediaries, in particular in online environments (eCommerce and marketplaces).
- It applies to non-EU based merchants who sell to EU consumers, especially merchants who offer goods via platforms.
- Article 6a does not apply to general advertising claims that promote the seller’s offer by comparing it with the offers of other sellers without giving the impression of or alluding to a price reduction, such as “better prices/lower prices” .
- It does not cover long-term provisions that allow consumers to benefit from systematically reduced prices and specific individual price reductions.
- It also does not apply to other price advantage promotion techniques other than price reductions, such as price comparisons and linked (conditional) offers.
- It does not apply to intermediaries who simply provide the means for merchants to sell their products, or who merely collect and display price information provided by other sellers (comparison platforms).