Case of the month: indicating a discount price on price tags does not violate consumer rights and meets statutory requirements
- Service: Commercial arbitration and out-of-court dispute resolution
- Date: 24.09.2014
Capital Legal Services successfully defended before the Commercial Arbitration Court of the North-Western Circuit the retailers’ right to indicate a discount price on price tags. At the beginning of September, the cassation court finally drew a line under disputes with the Directorate of the Russian Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing (Rospotrebnadzor) for St. Petersburg over the format of price tags.
Continuous claims by inspection bodies were related to indication on a price tag of a discount price for cardholders or during a marketing campaign. Representatives of Rospotrebnadzor considered such format for price tags as being inconsistent with the principle of price tag uniformity and as misleading consumers about the actual price for goods. It should be noted that such disputes have existed for a number of years, and commercial arbitration courts, unlike courts of general jurisdiction, have always ruled in favor of the inspection bodies by finding sellers to be at fault.
Rospotrebnadzor also filed claims against a client of Capital Legal Services – a St. Petersburg network of cosmetics and fragrances shops. Upon results of the inspection, the Client was instructed to eliminate violations in the price tag format as regards indicating a discounted price for cardholders and subject to the goods markdown. However, the current legislation does not prohibit from doing so.
In response to our requests to clarify other ways for the Client to inform consumers of the discounts, the Directorate provided no real answers, but rather only formal replies stating that the rules for selling certain goods had been violated and, in particular, that goods prices should be uniform for all consumers and price tags should have uniform and clear appearance (Clauses 18 and 19 of the Rules for selling certain types of goods as approved by Resolution No.55 of the Government of the Russian Federation dated January 19, 1998). This approach clearly demonstrated that Rospotrebnadzor’s claims would continue endlessly and that the only way to protect rights and interests of the Client was to address a commercial arbitration court and challenge the adopted instructions.
The court of first instance and the court of appeal dismissed our claims and stood for the Directorate. In the course of the proceedings, it became obvious that the court relied on the previously established court practice not in favor of our Client, which ruled out a possibility to indicate two prices for a product. Therefore, it was decided to file a cassation appeal against acts of lower courts with the Commercial Arbitration Court of the North-West Circuit in an effort to reverse the practice.
Our associates prepared a cassation appeal focusing on the fact that the court is the only authority capable of clarifying the issue and of protecting the rights of our Client. As a result, the cassation court agreed with our arguments and cancelled the acts adopted by the court of first instance and the court of appeal. The cassation judges confirmed that Rospotrebnadzor’s claims did not have any legal grounds and that the legislation contains no prohibitions on indicating discounted prices on price tags. The court’s main argument was that the price tag does not contain two prices as considered by the inspectors, but only one price that varies depending on whether a buyer holds a loyalty card or if a store has any promotion campaigns.
Now retailers should not be afraid of Rospotrebnadzor’s claims regarding price tags and, in case of a dispute, could refer to the ruling adopted by the cassation court. It should be noted that the cassation court by this ruling has in fact eliminated the discrepancy between the approaches of commercial arbitration courts and courts of general jurisdiction which did not find any violations of consumer rights when a seller indicated a discounted price on a price tag.