- Extending Discount Promotion an Infringement of Competition Law
- March 3, 2016
- Law Firm: GRP Rainer LLP - Cologne Office
- According to a judgment of the LG Hamburg (Regional Court of Hamburg), extending fixed-term promotional discounts for no particular reason constitutes an infringement of competition law.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Fixed-term promotional discounts are an important form of advertising for many businesses. With bargain promotions, it is possible to purposefully attract customers. In principle, there is nothing wrong with this. That being said, individual stores are not allowed to arbitrarily extend the timeframe for these kinds of promotions for no particular reason. According to a ruling of the Landgericht Hamburg from June 17, 2015, this advertising could then be misleading to consumers and thus constitute an infringement of competition law (Az.: 408 HKO 17/14).
In the instant case, a fixed-term promotional discount was extended by several days in a few stores. The Landgericht Hamburg took the view that this amounted to misleading advertising; while the offers were tempting for consumers, the latter were also pressed for time when it came to deciding whether or not to purchase. It stated that extending the promotional discount meant that there was no reason for this time pressure. Essentially, consumers would have had more time to consider their decision to purchase. The LG Hamburg therefore held that this type of promotion infringed Germany’s Gesetz gegen den unlauteren Wettbewerb (UWG) [Unfair Competition Act]. The Bundesgerichtshof (BGH) [German Federal Court of Justice] had already ruled in a similar case that it was possible for an extension of a promotional discount to constitute an infringement of competition law.
The BGH had concluded that a commercial activity could be misleading if it involves untrue statements or statements that are likely to result in a false understanding regarding the reason for the sale, such as a special discount. Accordingly, a fixed-term special sales promotion could also be misleading should the promotion be carried on beyond the advertised timeframe. The Court went on to say that if a special promotion specifies a fixed-term then the company in question needs to stick to this (Az.: I ZR 173/09).
Advertising, including by means of promotional discounts, is a crucial factor for many businesses. Having said that, the legislature has established boundaries. Infringements of the UWG may be met with severe punishments, including formal written warnings, damages claims and injunction suits.
Businesses can turn to lawyers who are competent in the field of competition law to fend off or enforce these kinds of legal actions.