Omnibus Directive: what changes for Businesses
The goal is to ensure greater harmonization among EU member states in consumer protection and to align national legal frameworks with the digital evolution of markets. The Omnibus Directive also introduces specific rules concerning price reduction announcements and an obligation for the authenticity of product reviews, as we will see shortly.
Lower Price and Authenticity of Reviews
The Omnibus Directive stipulates that in price reduction announcements, which contain information about a promotion for a specific product, the seller must not only show the reduced price but also the previous price, defined as "the lowest price applied by the professional to the general public in the 30 days preceding the price reduction". This rule applies regardless of the medium used to disseminate the price reduction announcement, both online and offline. This "double indication" of product prices allows consumers to have a clear and transparent reference to the reduction applied, helping them understand how advantageous the offer actually is.
In the case of progressive price reductions during the same campaign, the first price reduction follows the aforementioned rule. For subsequent reductions, the price to be indicated will be the first price considered, without the reduction.
The FAQ section of the Ministry specifies that "the rule on price reduction announcements applies only to goods and not to services". However, it is important to note that the responses contained in the FAQ do not affect the interpretation of the Omnibus Directive, and therefore, the principle that consumers must always be provided with correct information in respect of advertising and price and promotions exposure remains firm.
However, from this rule, the legislator excludes the following products:
- Agricultural and food products that could become unsuitable for sale within 30 days of harvest/production/processing;
- Meat-based products;
- Pre-packaged products with a shelf life not exceeding 60 days;
- Bulk products not treated to extend their shelf life beyond 60 days;
- All types of milk (together, "perishable products").
In addition to these products, the legislator has provided that the general rule does not apply to below-cost sales and launch prices, while it applies to extraordinary sales³.
According to the FAQs of the Ministry, the following are also excluded from the application of the rule:
- Comparative advertising with prices practiced by third-party competitors;
- Cases where the price reduction is subject to specific conditions (such as, prize operations, loyalty programs, etc.);
- Promotions subject to conditions/quantitative discounts/free gifts on particular purchases;
- Personalized offers;
- Discount coupons, vouchers intended for a specific category of consumers, or cashback programs.
Regarding product reviews, the Omnibus Directive includes among deceptive practices "stating that product reviews are submitted by consumers who have actually used or purchased the product without adopting reasonable and proportionate measures to verify that the reviews come from such consumers", as well as "sending, or commissioning" a third party "to send false consumer reviews or false appreciations or to provide false information regarding consumer reviews or appreciations on social media, in order to promote products". The legislator's goal is to ensure greater authenticity of the reviews provided by sellers, protecting potential buyers from false or misleading information.
In the event of a confirmed violation of this obligation by the seller, the Italian Competition Authority (AGCM) – in addition to prohibiting the deceptive commercial practice – can impose an administrative fine calculated based on precise criteria and ranging between 5,000.00 and 10,000,000.00 euros.
Why is it important to adapt?
Adapting to the provisions of the Omnibus Directive is crucial for several reasons:
- Legal Compliance: The Omnibus Directive has been transposed into Italian law, specifically within the Consumer Code, which governs relationships involving consumers. Violating these rules can lead to significant sanctions, the amount of which varies depending on the type of violation committed and its severity.
- Consumer Protection: The legislator's objective with the introduction of the Omnibus Directive is to protect consumers. For example, by ensuring that information about prices and product reviews is accurate and reliable, sellers can build customer trust and improve their reputation.
- Fair Competition: The Omnibus Directive helps create a level playing field for all sellers, preventing unfair commercial practices that could harm consumers and/or other market operators. This promotes healthy competition based on the quality of products and services, rather than on misleading or deceptive information.
Best Practices for Sellers
To ensure compliance with the Omnibus Directive, companies can follow some best practices such as implementing a price monitoring system and using verified review systems.
Price Monitoring
A robust price monitoring system is essential and must be designed and developed specifically for the platform being used for online sales or for retail management software. This system must be able to record the lowest price at which a product or service was sold in the last 30 days, displaying this data when the product or service is on promotion. Price information must be visible at every stage of the customer's purchase journey. This includes product pages on the owner's site, advertisements, newsletters, social media posts, and price tags in physical stores. In other words, every time the promotional price of a product is shown to a potential customer.
Review Management
Review management is another crucial aspect of compliance with the Omnibus Directive. Sellers must ensure that all reviews of their products come from customers who have actually made a purchase and used the product.
To do this, third-party tools that automatically send review requests to customers after a purchase can be used, allowing verification of the authenticity of the reviews, for example by checking whether the reviewer's email address matches that of a customer who has made a purchase. These tools also allow for real-time monitoring of reviews, enabling more timely responses whether the reviews are negative or positive.
Adapting to the Omnibus Directive is therefore essential to ensure market transparency and consumer protection, but it also helps build customer trust, improve a company's reputation, and promote healthy competition based on the quality of products and services.
This article was written by Sara Sanna, Web Development Team Manager.
Notes
¹Omnibus Directive (Directive (EU) 2019/2161 of the European Parliament and of the Council, transposed in Italy by Legislative Decree No. 26 of March 7, 2023)
²For which are meant "public sales of one or more products carried out at a price lower than that resulting from the purchase invoices increased by value-added tax and any other tax or duty related to the nature of the product and decreased by any discounts or contributions attributable to the product itself, provided they are documented"
³For which are meant "clearance sales, end-of-season sales, and promotional sales in which the retail trader offers favorable, real and effective purchase conditions of their products". Indeed, in these cases, the legislator expressly provides that "the discount or markdown made must be expressed as a percentage of the normal selling price, which must nevertheless be displayed".
