With the Omnibus law, consumers in the grand duchy are protected under the same rules of consumer protection during a transaction, whether they exchanged money or personal data against a service or product. Business owners and online stores also have to ensure that the reviews left on their websites come from clients that have actually tried the products.
The third aspect of this regulation impacts the display of discounted prices. Since December 2022, businesses and online retailers have to indicate a reference price next to the new, discounted price. The reference price on which the discount is applied must be the lowest price the product was sold for in the past 30 days. This aims to discourage dishonest sales practices, like blowing up a price on the day prior to applying the discount and therefore presenting it as a better opportunity than what it is.
Under this law, items that are sold for the first time, during a sales period or braderie for instance, also can’t be displayed as discounted items, as there is no previous price tag to refer to. Official sales periods--like the winter sales--are excluded from the regulation.
Though “it’s about adding more transparency” and about providing a clearer definition of what a discount is, as the ministry of consumer protection tells Delano, some questions arise regarding the application of this law.
How can consumers check prices?
Tracking all price evolutions across stores and websites that sell to consumers in the grand duchy seems like an impossible task as it would require more agents than there are stores in Luxembourg. “Even with this reference price, which must be respected, it will be difficult for the average consumer to be sure that the law is respected,” says Bob Schmitz, European affairs advisor for the Luxembourg consumer protection union ULC.
“The supervisory authorities, in this case the Ministry of Consumer Protection, must have the means to carry out the control,” he says, though Schmitz acknowledges that the price guide provided by the ministry to businesses is a good effort towards implementing the legislation.
When asked, a spokesperson for the ministry confirmed that though it was not possible to check every single price, “the process of checking price displays is something that has existed for a long time.” Agents either select a list of items to follow over a set period of time, or, if they go in the field, check that the barred prices are shown clearly next to the new price.
Consumers, if they wanted to check for themselves, can also access the price history of products online, says the ministry. “Of course, as a consumer, you wouldn’t be able to check the prices every day, but it’s like everywhere: there is a law, and it needs to be respected. It’s not up to the consumer to check that it’s being respected.”
Keeping up with the digital world
Digital retailers are also held by the same rules, but here too, keeping an eye out for all websites can be complicated.
Online retail giant Amazon for instance has to comply with grand ducal legislation as its EU headquarters are based here. Websites targeting European consumers that not based in the EU are also subjected to this directive, confirms Schmitz. "All platforms that target certain markets in the European Union--like Alibaba, which have sites in French, German, Italian etc (which is proof that they target markets in the EU)--know that they have to apply European law." The problem, according to Schmitz, would be to manage to sanction them in case of infringement of the law.
Though consumers can notify authorities in case of an issue, the ministry is not “a legal advisor for individual consumers” it says. Legal action can be taken however, if there are many incidents, through a union for instance. Some sanctions foreseen by the legislation are a fine equivalent to 4% of the fraudulent business’ turnover or up to €2m, for those going against EU or cross-border law and for incidents affecting at least three member states or two thirds of the EU population.
More locally, like in the case of Letzshop, the ULC expert says that there are no indications that they check that sellers comply with the law. Delano contacted Letzshop for comment but didn’t receive a response by the time of publishing. For the ministry, even though it’s not an obligation for Letzshop to implement correct price displays by firms, “in practice, the platform is contacted.”
In cross-border infringements, the ministry cooperates on EU level with authorities from other member states or the EU commission for cross-border issues--as it makes more sense than to just represent Luxembourg consumers. However, Schmitz says: “The ministry needs to strengthen its means of control”, especially if the grand duchy wants to continue attracting digital companies in the future.
But who does this legislation serve?
The basis of the omnibus legislation is that consumers have to trust that businesses follow the rules and that the information provided is transparent. Or, they have to regularly follow the course of the evolution of a price.
So does this regulation serve consumers? For Schmitz, it contributes more to fair competition than it directly benefits consumers. For the ministry, however, “better competition and more transparency between competitors is also good for the consumer. This means better prices and a better quality in the products sold.”
But even so, the debate remains on whether the price display aspect of the new law is truly necessary, says the consumer union. Though the ministry stresses the added value of transparence, the ULC’s Schmitz underlines that it is a double-edged sword: “Barred prices can be an incentive to buy more. We’re trying to avoid overconsumption, but this new provision could have an influence on consumer behaviour.”
In the meantime, the new law--implemented past the deadline dictated by the EU directive--is now in place. According to the ministry, its impact and implementation will be especially interesting at this point, as reference prices will be the low prices set during the winter sales of January 2023.