The First Civil Senate of the Federal Court of Justice (BGH), which is responsible, among other things, for competition law, today ruled on the admissibility of a discount campaign announced with the slogan "20% off everything".
The defendant operates DIY stores at many locations in Germany. In January 2005 it ran a discount campaign for which it advertised with the slogan "20% off everything, except pet food". The plaintiff, the Zentrale zur Bekämpfung unlauteren Wettbewerbs (Central Office for Combating Unfair Competition), sued the defendant for injunctive relief. It took the view that the promotion was anti-competitive because it misled consumers. It had established on the basis of test purchases that for four articles - the defendant's product range comprises about 70,000 articles - a lower price had applied immediately before the promotion, which had been increased at the start of the promotion. It was undisputed in the proceedings that the defendant had already charged the higher prices for the four articles over a longer period of time in the past, but that a special price had been in force in the week immediately before the promotion, which, however, was not marked as such.
The Regional Court dismissed the action. The Higher Regional Court confirmed this judgement. The Federal Supreme Court overturned the appeal judgement and ordered the defendant to cease and desist as requested.
Pursuant to Section 5 (4) sentence 1 UWG, consumers are deemed to have been misled if a price reduction is advertised, provided that the price has only been demanded for an unreasonably short period of time.
The provision of Section 5 (4) UWG has the following wording:
It is presumed to be misleading to advertise the reduction of a price provided that the price has only been claimed for an unreasonably short period of time.
If it is disputed whether and in which period the price was claimed, the burden of proof shall be on the person who advertised the price reduction.
In the case of the four products purchased by the plaintiff, the defendant raised the reduced price when the discount campaign began. Such pricing is at least as misleading as advertising with an earlier price that was only charged for a short time. With the provision of § 5 para. 4 sentence 1 UWG, the legislator intended to counter abuses in price reduction advertising because such advertising has a high potential to mislead. This is particularly evident in the present case. The public understands an advertisement in which the entire product range, with the exception of one product group, is offered at a price reduced by 20% from a certain point in time in such a way that when buying any article from the range, the consumer achieves a price saving in the advertised amount compared to before. In fact, however, in the case of the four articles purchased by the plaintiff for test purposes, the consumer did not obtain any savings, or only savings in the range of a few percentage points, compared to the price applicable in the week preceding the promotion.
Judgment of the Federal Supreme Court of 20 November 2008, Case No. I ZR 122/06
Previous instances: OLG Saarbrücken - judgement of 21 June 2006 1 U 625/05 ; LG Saarbrücken - judgement of 10 October 2005 7 II O 5/05
Source: Press release of the Federal Supreme Court No. 216/08 of 20 November 2008
© Goldberg Attorneys at Law, Wuppertal-Solingen 2008
Attorney at Law Michael Ullrich, LL.M.(Information Law)
m.ullrich@goldberg.de
