How can you offer discounts in Ccmpliance with French and European Law?

1. Illegal price reductions can lead to sanctions

Discounts such as Black Friday promotions, bundle offers, launch prices, and loyalty program deals are strategic sales tools for e-commerce businesses. However, if not properly implemented, these discounts can create legal risks, especially concerning price reduction announcements. Since the Omnibus Directive was transposed into French law in May 2022, stricter rules govern all promotions for goods sold both online and in-store. Failure to comply may result in severe penalties, including fines up to €300,000 or 10% of annual turnover.
In this article, we will focus on the legal rules governing price reductions under Article L.112-1-1 of the French Consumer Code. This article does not cover the broader legal framework for sales, liquidation events, and clearance sales, which are regulated practices under French law.

2. What does French Law say?

Article L.112-1-1 of the French Consumer Code stipulates that any price reduction must mention the lowest price applied during the 30 days preceding the promotional offer. For example, if you offer a product at €50 for 29 days, then reduce it to €40 for one day, you cannot revert to €50 and advertise another reduction until 30 days have passed.
This rule applies to all professionals, whether selling in physical stores, online, or through platforms like Amazon. However, marketplaces (which aggregate offers from various sellers without directly engaging in the sales process) are not subject to this regulation. Consequently, the responsibility for price reduction announcements lies solely with the seller.

3. How to optimize your discounts

3.1. Clearly define the previous price

When running a promotion, the previous price must be clearly displayed. This price should reflect the one applied in the 30 days prior to the announcement. In the case of successive promotions (e.g., “first markdown” and “second markdown” during sales), the reference price remains the one before the first discount.
For instance, if during the first markdown a product’s price drops from €50 to €40, and the second markdown reduces it to €30, the reference price remains €50.

If you operate multiple stores or online platforms, each sales channel must display the previous price specific to that channel. Thus, an online store cannot advertise a discount based on a price from a physical store, unless both have applied the same price.

3.2. Examples of compliant displays

On platforms like Amazon, you may often see crossed-out prices with a note such as “Old price: €59.99, Flash Price: €39.99.” This type of display complies with the law, as long as the crossed-out price reflects the one applied during the last 30 days.

On platforms like Zalando, you may notice promotions that do not change the reference price and do not specify the duration of the promotion. Be cautious when adopting this practice: if the promotional period becomes excessively long, it may be considered misleading under French commercial law.

3.3. Personalized promotions: avoid the main pitfalls

The law provides exceptions for targeted promotional offers. For instance, a discount reserved for loyalty program members or specific consumer groups (students, large families, etc.) does not fall under the price reduction rules regulated by Article L.112-1-1 of the French consumer code.
However, if a discount is available to all consumers, even via a promotional code (e.g., “20% off with code XYZ”), it must comply with the rules for announcing price reductions.

4. Protect your business while boosting sales

You must structure your promotions in line with both French and EU legislation to avoid penalties.

Here’s a basic checklist to help you comply with regulations while maximizing sales:

• Use price-tracking software to ensure your discounts meet the 30-day criteria
• Train your marketing teams on the rules of Article L.112-1-1 of the French Consumer Code and the consequences of non-compliance
• Clearly display previous prices and discount percentages so customers can easily understand the offer
• Review your promotional announcements before each campaign

For more information, you can consult the FAQ from MEDEF here (available in French): https://www.medef.com/fr/actualites/faq-annonces-de-reduction-de-prix

Still have questions about ensuring your price reduction announcements comply with the law?

SLASH AVOCATS is here to help. Our e-commerce lawyers can help you secure your online business while increasing sales.

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