The I. Civil Senate of the Federal Court of Justice (BGH), responsible inter alia for competition law, ruled today on the admissibility of a discount campaign advertised with the slogan “20% off everything”.
The defendant operates construction and DIY stores at numerous locations in Germany. In January 2005, it conducted a discount campaign, advertising it with the slogan “20% off everything, except pet food”. The plaintiff, the Centre for Combating Unfair Competition, sought an injunction against the defendant. It argued that the campaign was anti-competitive due to misleading consumers. Based on test purchases, it had determined that for four items – out of the defendant's assortment of approximately 70,000 items – a lower price had been in effect immediately before the campaign, which was then increased at the start of the campaign. It was undisputed in the proceedings that the defendant had also charged the higher prices for these four items over a longer period in the past, but that a special price had applied in the week immediately preceding the campaign, which, however, was not marked as such.
The District Court dismissed the action. The Higher Regional Court upheld this judgment. The Federal Court of Justice overturned the appellate judgment and, in accordance with the application, ordered the defendant to cease and desist.
Pursuant to § 5 para. 4 sentence 1 of the Act Against Unfair Competition (UWG), consumers are presumed to be misled if a price reduction is advertised, provided that the price was only demanded for an unreasonably short period.
The provision of § 5 para. 4 UWG reads as follows:
It is presumed to be misleading to advertise a price reduction if the price was only demanded for an unreasonably short period.
If it is disputed whether and for what period the price was demanded, the burden of proof lies with the party that advertised the price reduction.
For the four products acquired by the plaintiff, the defendant increased the reduced price at the start of the discount campaign. Such pricing is at least as misleading as advertising with a previous price that was only demanded for a short period. With the regulation in § 5 para. 4 sentence 1 UWG, the legislator intended to counter abuses in price reduction advertising, as such advertising carries a high potential for misleading consumers. This is particularly evident in the present case. The public understands an advertisement, in which the entire assortment, with the exception of one product group, is offered at a 20% reduced price from a certain point in time, to mean that they will achieve a price saving of the advertised amount compared to the previous price when purchasing any item from the assortment. In reality, however, for the four items acquired by the plaintiff for testing purposes, the consumer achieved no savings or only a saving of a few percentage points compared to the price applicable in the week before the campaign.
Judgment of the BGH of november 20, 2008, File No. I ZR 122/06
Lower Courts: Higher Regional Court Saarbrücken – Judgment of June 21, 2006, 1 U 625/05; District Court Saarbrücken – Judgment of October 10, 2005, 7 II O 5/05
Source: Press release of the BGH No. 216/08 of november 20, 2008
© Goldberg Attorneys at Law, Wuppertal-Solingen 2008
Attorney at Law Michael Ullrich, LL.M.(Information Law)
m.ullrich@goldberg.de
