Does your business use the word “from” to advertise its prices (for example “from €14.99”)? In a recent decision, a German court held that such pricing strategies mislead consumers and breach German competition law.
Misleading pricing practices
The case concerned a driving school which displayed prices in the window of its premises. In accordance with the Driving Instructors Act (Gesetz über das Fahrlehrerwesen), the school advertised a lump-sum price for a range of teaching services including theory lessons, examination fees and advanced seminars and hourly rates for driving lessons (€30) and extra lessons (€45). The total cost of driving instruction was then summarised as being “from €1,450”.
The driving school received a warning letter from a competitor requiring cessation of the use of such pricing practices and the reimbursement of legal costs.
Under §19 sub-paragraph 1 sentence 5 Driving Instructors’ Act, driving schools must advertise prices clearly. The Regional Appeal Court of Celle held that by using the word “from”, customers are unable to determine the actual price which would ultimately become payable (21.03.2013, Az. 13 U 134/12). As a result, the court decided that such a pricing strategy amounts to a competition infringement.
Consequences for online businesses
The decision could have consequences for businesses beyond driving schools. As online businesses regularly receive competition infringement warning letters, they should ensure that their pricing strategies are easy for consumers to understand. In other branches too, businesses could find that their pricing practices are in breach of competition law for misleading consumers.