18 January 2017
The Consumer Ombudsman has imposed a prohibition on Indoor Group Ltd for Asko and Sotka discount sale marketing, which has been illegal and has continued despite repeated guidelines issued to the company by the Consumer Ombudsman. Notice of a EUR 100,000 conditional fine has been issued in order to enforce the injunction. The company must change its marketing as required by the prohibition by 14 February 2017.
Although consumers benefit if they are able to buy products at a lower price, prolonged sales also have their drawbacks. Marketing of sales over a long period and at a high frequency leads consumers astray by confusing them with regard to the company’s normal price level and, consequently, the actual amount of the discount.
The marketing of discount sales by the retail chains Asko and Sotka, which form part of Indoor Group Ltd, lasted for over three months in 2014 and 2015. In addition to this, the company has been marketing products at discount prices for a continuous period of more than two months. The Consumer Ombudsman also prohibited Indoor Group Ltd from comparing the product prices in their marketing to the recommended retail price, if consumers had not, in fact, been charged such a price. In addition, the Consumer Ombudsman prohibited them from presenting the false claim in their marketing that the offer product is available at a certain price for only a brief, limited period, even though the company will sell the same product at the same price after the offer period. The company has therefore misled consumers about the low prices of its products. In its decisions, the Market Court has considered such marketing practices illegal.
The Consumer Ombudsman had advised Indoor Group Ltd about marketing rules on several occasions before the marketing carried out in 2014 and 2015. Since there has been no change, the Consumer Ombudsman considered it necessary to ban the company from the continuous discount sale advertising of furniture.
The company must change its marketing as required by the ban by 14 February 2017. If, despite the ban, the company continues to act illegally, the Consumer Ombudsman may request the Market Court to order that the conditional fine be paid.
In 2016, the Market Court imposed the payment of a EUR 100,000 conditional fine on Masku, a furniture retailer, due to its continuous discount sale marketing. Price issues are also being considered in the Supreme Court which, in December 2016, gave the Consumer Ombudsman leave to appeal in the matter concerning sports retailer XXL.
Consumer Ombudsman receives leave to appeal the XXL decision of the Market Court (FCCA's press release 8 December 2016)
The Market Court imposed a penalty payment of EUR 100,000 on Masku due to its continuous discount sale marketing (FCCA's press release 27 June 2016)
The Market Court prohibits XXL's misleading advertising (FCCA's press release 24 November 2015)