Summons of Lidl concerning
bait and switch practices

The supermarket chain Lidl will have to appear before the criminal court of Ghent since it has been accused of distributing misleading publicity.

After several economic inspections, carried out between 2007 and March of this year, an action was brought against the chain since a series of violations of the law relating to market practices and consumer protection would have established. It concerns the so-called bait-and-switch practices where Lidl would be guilty off. In the considered period, the federal agents of the ministry of economic affairs have registered more than 160 alleged violations.

Under European influence, consumer protection is valued highly and has a substantial impact on the commercial life. Firstly, Articles 86 j. 88 of the LMPC prohibit advertising which contains assertions, data or conceptions that are able to mislead regarding the identity, nature, composition, origin, quantity, availability or the features of the product or the consequences for the environment. In order for the advertising to constitute an infringement, it is not required that the publicity is in fact misleading or has caused damage. It suffices that the publicity, taking its overall impression into account, is capable to mislead people from the target group. This assessment needs to be made from the point of view of the average consumer who has average differentiation abilities. Only if the misconception is of that extent that it is capable to effectively influence the economic behaviour of such consumer that it can be qualified as misleading advertising. Bad faith on behalf of the seller is not a requirement to prohibit the misleading publicity.

Bait-and-switch practices, where Lidl is suspected of, comprise a type of misleading publicity, which is specifically prohibited by the LMPC. Article 91, 5° of the LMPC prohibits the advertising relating to the offering of products or services if the seller does not have a sufficient supply or cannot perform the services which, taking into account the size of the publicity are expected to be delivered. Thus, it concerns situations where retailers lure costumers into their stores with special promotions and actions for products of which they only have a few in stock. Typically, the consumer, once he entered the store, will buy, out of convenience, other products as well, or only other products.

Large wholesalers who offer a varied number of products can benefit from such practices. Publicity, where products are offered at a lower price is not prohibited as such. It is only required that a sufficient supply is available. Furthermore, the seller has to take Article 101 of the LMPC into account, in furtherance of which the lower price cannot result in resale at loss. In addition, the provisions regarding price reductions must be complied with and that the provisions, embedded in Article 20 relating to price reductions are to be respected.

Concerning this last category, pursuant to Article 37 of the LMPC, a retailer that announces a price reduction, limited in time and outside his store must, if the product cost more than EUR 25 and the stock is exhausted, offer the consumer a voucher which entitles him to purchase that product within a reasonable timeframe and under the same conditions of the offer. The assessment of the presence of a sufficient supply needs to be made for each and every selling point separately which is named in the publicity. However, the situation in other selling points may be taken into account. The assessment must be made at the time of launching the publicity.

Lidl is not the first food chain to be held accountable for such practices. In 2003, the commercial court held Carrefour liable since it had adverted the sale of electronic devices without providing for a sufficient stock. Nonetheless, the court failed to verify if the statement that only a limited number of products are available would justify Carrefour’s actions and thus no violation of old article 23, 9° of the LPCC would have been withheld. In that case, the consumer would clearly be notified that the supply is limited and hence the risk existed that the supply would be exhausted where he arrives at the store. Although such a statement would not be considered an absolute justification, it could have been of some value in the defence. Indeed, the court needs to verify if a reasonable supply was in fact anticipated.

The exact number of products that have to be in stock is not clearly defined. The law stipulates suppose a reasonable supply in proportion with the size of the advertising must be available. In case of a national campaign, it would be fair to suppose that the concerning products will be available in all stores. The exact amount, which can be categorized as reasonable, fwill be appreciated by the court. However, the mere mentioning of the formula ‘as long as available’ will not suffice to exonerate the seller when the supply seems insufficient.

In the Carrefour case, the commercial court ordered Carrefour to stop the practice, subject to further penalties per enfringement. It is uncertain how the criminal coiurt will rule in the Lidl case.

08 November 2010

Alain De Jonge - Griet Verfaillie - Lynn Pype

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