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25 April 2022

FoodTech – 2 of 4 Insights

New Price Indication Ordinance as from 28 May 2022

Requirements for price discounts and rebates, indication of the basic price and the unit of measure, marking of deposit amounts, price indication for electric vehicle charging stations - these are the most important changes!

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Andreas Bauer

Andreas Bauer

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On 28 May 2022, the new Price Indication Ordinance (PAngV) will come into force in Germany. This amounts to a complete amendment of the existing Ordinance. In addition to restructuring, it also includes some new provisions in terms of content, including in particular, a new obligation to provide information when advertising price reductions and discounts. In future, the so-called lowest 30-day price must be stated as the reference price. This also poses new challenges for companies in the AgriTech/FoodTech sector. This article now sets out the most important changes to the PAngV. Ultimately, violations of the PAngV can lead not only to competition law warnings by competitors or associations, but also to fines as an administrative offence.

European Context

Directive (EU) 2019/2161 (so-called Omnibus Directive), which came into force in January 2020 and which implemented the so-called “New Deal for Consumers” was also accompanied by an amendment to the so-called Price Indication Directive (Directive 98/6/EC). This led to the German legislator having to adapt the Price Indication Ordinance (PAngV). However, the legislator did not only make those changes that resulted from the Omnibus Directive. It also took the opportunity to make further adjustments, some of which were based on court decisions on the old PAngV, and to implement them.

The new PAngV takes effect in Germany as from 28 May 2022. There is no transitional period

The most important changes in detail

New requirements for price reductions and discounts

This new provision has the greatest practical relevance of all the amendments to the Ordinance. A new duty to inform was established when advertising price reductions to consumers. This new duty to inform arises from Section 11 PAngV as amended. The aim is to enable consumers to better assess price reductions and to better evaluate prices on the basis of uniform information. This is achieved by preventing advertisements with price reductions from using artificially high comparative prices that were only charged for a very short time or even never before the reduction. 

According to Section 11 PAngV as amended, every announced price reduction must therefore in future be based on the so-called lowest price of the seller/retailer of the last 30 days before application of the reduced price. In future, this must also be indicated as the reference price

On the one hand, this applies to all measurable price reductions, such as “10 % discount” or the comparison of old and new prices, in particular in the form of substitute or strike through prices. It is also irrelevant whether the price reduction only applies to individual products, to a certain category of goods or even to the entire product portfolio. In all cases, the scope of application of Section 11 PAngV is opened up. 

On the other hand, the new information obligation also applies if no directly measurable price reduction is announced, but the specific design/formulation of the advertisement nevertheless creates the impression of a price reduction. This may be the case, for example, when using terms such as “special offer”, “Black Friday offer”. To be distinguished from this are general price statements without any impression of a reduction, such as “knockdown price” or similar. Such formulations continue to be possible without triggering the new information obligation. 

Legal exceptions are provided for according to Section 11 (4) PAngV in the case of individual discounts (e.g. birthday discount, 10% voucher for the next purchase, discounts within the scope of loyalty programmes) and in the case of price reductions for quickly perishable goods or goods with a short shelf life.

In a nutshell, this new provision raises many questions and problems in practice. It therefore remains to be seen how strict the courts will be in applying this new provision and which new groups of cases will be formed. 

More details on this important topic can be found in a separate article.

Indication of the basic price 

The obligation to indicate the basic price will in future be regulated in Section 4 PAngV as amended. Previously, the basic prices always had to be indicated in the immediate vicinity of the total price. This requirement of immediate proximity no longer applies. Instead, according to the new regulation, the basic price must only be “unambiguous, clearly recognisable and easily legible”. The background to this amendment is that the proximity requirement has been questioned by several courts under EU law. The legislator has now taken up this criticism. At the same time, however, the explanatory memorandum to the Ordinance points out that the total price and the basic price must still be perceptible at a glance, which again results in a restriction. This continues to speak against link or mouse-over display. It remains to be seen whether case-law will follow this. 

Reference units of measure for the basic price

According to Section 5 PAngV as amended, in future 1 kilogram or 1 litre must be uniformly used as the reference unit of measure for the indication of basic prices. This is to ensure better price transparency for the consumer. Up to now, it was possible to use the quantities of 100 grams or millilitres for goods whose nominal weight or nominal volume did not normally exceed 250 grams or 250 millilitres. This exception was deleted without replacement. 

Section 5 (3) of the PAngV now also provides that in the case of liquid goods offered for self-filling, which are filled into the respective outer packaging by the consumers themselves, the basic price may also be indicated by weight

Facilitation of the reduced-price sale of perishable foodstuffs

In future, according to Section 9 (1) No. 3 PAngV as amended, the obligation to indicate a new total or basic price will not apply if the price is reduced due to an imminent risk of spoilage or an imminent expiry of the shelf life. Up until now, this was only the case when there was a threat of spoilage. Now there is an extension to perishable food whose shelf life is expiring. This is intended to counter food waste. Another new feature is that the exemption applies not only to the indication of the basic price, but also to the indication of the total price. However, there are doubts as to whether the German legislator was entitled to do this at all from the point of view of EU law. It therefore remains to be seen how the courts will evaluate this new exemption from the obligation to indicate the total price. 

Designation of any deposit amounts 

In the previously applicable PAngV, Section 1 (4) provides that the amount of any deposit (such as on recyclable plastic bottles) is not to be included in the total price. Instead, the amount of the deposit must be stated next to the price. This regulation is highly controversial. In particular, its conformity with the EU is questioned. Currently, a CJEU case is also pending on this issue, after the BGH referred this question on the separate indication of the deposit amount to the CJEU for a preliminary ruling in the case ref. I ZR 135/20 by decision of 29 July 2021. However, the legislator was not impressed by this when amending the PAngV. On the contrary, in the newly amended Section 7 PAngV, it has provided that the amount of the deposit must (still) be indicated next to the total price. Furthermore, the deposit amount must be disregarded when calculating the basic price. It remains to be seen how the BGH and the CJEU will deal with this. 

New provision on price indication for electric vehicle charging stations  

Finally, the provision in Section 14 (2) PAngV as amended on the special features of point charging for electronically operated vehicles is also new. Accordingly, the price applicable to the respective charging station must be indicated at the charging point or in its immediate vicinity. At the same time, however, it is clarified that this can also be done by means of a registration-free and free mobile website, which must be indicated at the charging station. 

Summary

Overall, the amendment of the PAngV is to be welcomed. The structure of the Ordinance is now better and clearer, making it much more user-friendly. This makes it easier to understand and deal with the Ordinance in practice. 

  • It should also be welcomed that at least some of the criticism by the courts has been taken into account in individual provisions. This provides clarity and legal certainty. However, the criticism of the provision on deposits has been resisted. We will have to wait and see how this develops. It is quite conceivable that this part of the Ordinance will soon have to be changed again. 
  • The greatest impact on the practice of all advertising companies will be the new provision of Section 11 PAngV as amended, with the obligation to indicate the lowest 30-day price when advertising with price reductions. De facto, many discount promotions will no longer be possible or at least no longer be in the advertiser’s interest due to the resulting consequences. In particular, it must be taken into account in advance that any advertising with a price reduction will not only lead to the new mandatory information, but as a result the reduced price will also establish a new, lowest 30-day price, which must then be referenced in the future. This new regulation also entails a considerable price documentation effort on the part of the companies concerned. 
  • As is so often the case with new laws, a certain degree of legal uncertainty will be unavoidable at first. This is especially true if you move into the grey areas of the amended Ordinance with your advertising measures. Some provisions require interpretation and concretisation. Some of the legislator’s explanations are rather sparse. Only case law will provide clarity over the next few years.
Services and Groups Brands & advertising
Sectors Biotech

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