Belgium implements Omnibus Directive: What this means for your business

Update 3 June 2022

On 28 May 2022, the law of 8 May 2022 (the Law) implementing Directive 2019/2161 regarding the better enforcement and modernisation of Union consumer protection rules (the Omnibus Directive) came into force, despite its late publication in the Belgian Official Gazette on 2 June 2022. This left businesses little to no time to transition and align with a number of significant and challenging changes to consumer protection stemming from the Law.

Introduction

The Omnibus Directive was adopted on 27 November 2019 and was set to be implemented by 28 November 2021; a deadline that many Member States, including Belgium, missed. The Omnibus Directive expands and enhances consumer protection and enforcement rules by amending four already existing directives: Directive 93/13/EEC, Directive 98/6/EC, Directive 2005/29/EC and Directive 2011/83/EU. The Law introduces these new provisions (and at some points exceeds the minimum requirements set by the Omnibus Directive) by amending Book I, VI and XV of the Belgian Code of Economic Law. The most significant changes introduced by the Law are set out below and include the introduction of GDPR level penalties, increased online marketplace transparency, expansion of consumer rights to “free” digital content or services, extension of the list of unfair commercial practices and new rules concerning announcements of price reductions.

Key outlines

High fines

One of the most noteworthy changes is the introduction of GDPR level fines in cases where businesses do not comply with their obligations under the Law. Where the Omnibus Directive imposed the obligation on Member States to introduce fines of up to 4% of the business’s annual turnover, the Law imposes, depending on the type of violation, sanctions of even up to 6% of the annual turnover of the business concerned, which is a significant increase compared to the fines under the Belgian Code of Economic Law to date.

Specific information requirements for online marketplaces

The Omnibus Directive introduces strict transparency obligations on online marketplaces, which are defined as “services using software, including a website, part of a website or an application, operated by or on behalf of a business which allows consumers to conclude distance contracts with other businesses or consumers.” In particular, providers of online marketplaces must provide the consumer with the following information in a clear and comprehensible manner before the consumer is bound by the distant sale:

• general information on the main parameters determining the ranking of products presented to the consumer as a result of a search query, together with the relative importance of those parameters vis-à-vis other parameters;
• whether the third party offering the goods, services or digital content is a business or not, and if not, that EU consumer protection does not apply;
• where applicable, how the obligations related to the contract are shared between the third party offering the goods, services or digital content and the provider of the online marketplace, such information being without prejudice to any responsibility that the provider or the third-party business has in relation to the contract under other Union or national laws.

Belgium did not make use of the option left by the Omnibus Directive to provide for additional information requirements.

Extension of consumer rights to “free” digital content and services

Where businesses supply digital content (other than on a tangible medium) or a digital service to the consumer in return for the consumer’s personal data, EU consumer protection rights will now also apply. This implies that in such case, these businesses are thus equated with businesses providing the same in return for an actual price and that they will no longer escape consumer protection rules. While there are certain exceptions to this extension, it nonetheless demonstrates to be an important step forward in terms of consumer protection law in the digital landscape.

Expansion of unfair practices

The Law also extends the black list of unfair “misleading” practices with the following:

• marketing a good, in one Member State, as being identical to a good marketed in other Member States, while that good has significantly different composition or characteristics, unless justified by legitimate and objective factors (also known as dual quality);
• providing search results in response to a consumer’s online search query without clearly disclosing any paid advertisement or payment specifically for achieving higher ranking of products within the search result;
• stating that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they indeed originate from such consumers;
• submitting or commissioning another (legal or natural) person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products; and
• reselling tickets to consumers if the business has obtained them by using electronic means in order to circumvent the number of tickets that a person is allowed to buy or any other purchase or other rules applicable to the purchase of tickets.

Announcement of price reduction

Arguably one of the most important provisions of the Omnibus Directive that will have a tremendous impact is that every announcement of a price reduction will have to indicate the prior price. The prior price means the lowest price applied by the business in a period of 30 days prior to the application of the price reduction. Before 2015, a similar legal framework already existed in Belgium, but it was abolished after a European Court of Justice ruling.

It is important to note that this ‘prior price’ does not need to be applied for an uninterrupted period of 30 days: it must simply be the lowest price applied in a period of 30 days preceding the application of the price reduction, even if that lowest price was only applied for one single day. Moreover, the Law does not provide for a minimum or maximum period during which the price reduction can be announced. The announcement can thus last for a period of longer than 30 days, as long as it would not become misleading.

The Law further elaborates on the announcement of price reductions beyond the provisions of the Omnibus Directive. In this respect, the Law specifies that the prior price must be determined separately per sales channel, even if the same product is sold through different channels. Further, perishable goods or goods with a limited shelf life are excluded from the new obligation and goods that have been (re)introduced on the market for less than 30 days may refer to the lowest price applied in the seven days preceding the application of the price reduction.

Also noteworthy is that the Law provides for a deviating legal regime for progressive price reductions, in which case the previous price is the price without price reduction, applied prior to the application of the first price reduction. Hence, businesses do not need to change their indication of the previous price to the previous discounted price each time they gradually decrease the price. It must however be noted that this deviation only applies to an uninterrupted progressive price reduction of maximum 30 days.

In addition, the explanatory memorandum to the Law offers further guidance and states that the new legal framework does not apply to references to the manufacturer’s recommended prices, joint offers or conditional offers, price comparisons, loyalty programmes or general wordings such as “promotion” or “launch price”.  As regards general announcements of discounts by category (eg 30% on all shampoos), no indication to the prior price is needed; however, the prior price for each individual good covered by the general announcement must be indicated at the point of sale (on the price tags in the shops or on the price sections in the interfaces of the online shops).

Lastly, as regards recurring discounts, the explanatory memorandum states that the prior price is that of the preceding week if this is the lowest price applied during the 30-day period preceding the application of the price reduction. This means, by way of example, that the weekly recurring discount will be the prior price if it is the lowest price applied in the 30-day period preceding the application of the price reduction. This creates a rather bizarre situation and would in practice undermine the concept of weekly recurring discounts. A similar exception as in the case of progressive discounts would have been more justified here.

Next steps for your business

The Law retroactively came into force on 28 May 2022, thus leaving no transitional period. Hence, if not already done so in anticipation of the entry into force, businesses will need to immediately re-evaluate their current B2C activities, advertising policies, terms and conditions and online practices. Please feel free to get in touch with your DLA Piper contact if you have any questions regarding any of the above or require further guidance.