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“Up to 50 percent off”. The large-format logo, which is white on a red background, looks like a program from furniture store Conforama. It stands out everywhere, whether in stores or on the internet. But as of last week, this ad has gotten a slap. Conforama was sentenced to a fine of CHF 5,000 and compensation of CHF 1.5 million for falsely declaring reduced prices in the canton of Vaud.
What exactly the seller did wrong is currently unknown. The whole decision is pending. Officially, it just says the company has been convicted of “violating price indicators regulation.” The parties can appeal to a higher authority.
However, the decision created excitement in the industry. Not so much because other major providers such as Ochsner Sport, Fust or M-Electronics have already been caught cheating at discounts. But also because the court of first instance in Lausanne ordered the furniture store to pay compensation of 1.5 million francs in favor of the canton. This is much more than the maximum fine of 20,000 francs stipulated by the unfair competition law for violating price disclosure regulations.
National Council wants to liberalize discount policy
But hardly anyone noticed that parliament took an important decision almost simultaneously on Tuesday: It wants to liberalize the rules on the requirement to write on deductions.
The decision is based on the initiative of Bernese FDP National Assembly Member Christa Markwalder. As president of the association, he is effectively the chief lobbyist of the Swiss Retail Federation, which represents Swiss retail companies in Bern.
Voting in the National Council was open. 139 to 42 for this. Only the SP faction was against it, all the other factions, even the Greens, were in favor. Therefore, it can be expected that the initiative will pass through the Council of State. Accordingly, the Federal Council has the obligation to liberalize the price-setting rules.
Discounts with no time limit
That’s about two points: First, how long does a product have to be on display at normal price for it to go on sale. Second, how long it can be offered at the discounted price afterwards. According to the National Council, both points should be greatly relaxed.
Previously, a product could only be offered at a discount if it was previously offered at the regular price. And the duration of the discount can be only half of the time the product is displayed at regular price, and a maximum of two months.
An example: If a piece of furniture is 500 francs and has been on sale for six months, it can be sold at a discounted price for a maximum of two months. Then the normal price is applied again.
This time restriction has disturbed the retailers. As a supplier, you never know in advance how well a discounted product will work. If it is not sold at a 20% discount, then a 30% or 50% discount is given. But then it often happened that the prescribed discount period had expired and a retailer had to charge the regular price again.
They also need to remove discounts and rewrite etiquette. “This relabeling is a huge effort for companies and employees,” criticizes Dagmar Jenni, president of the Swiss Retail Federation.
Now the following should apply: Four weeks on the screen at the regular price is enough to then sell for free with discounts for an unlimited period of time. If the price changes again, the product does not need to be relabeled, but previous price changes will remain visible.
Parmelin almost single-handedly opposed it.
Consumer organizations were caught on his left foot with an advance. The Consumer Protection Foundation did not comment on this. It opposed its western Swiss sister organization, the Fédération romande des consommateurs (FRC). FRC Director Sophie Michaud Gigon, who is also a member of the National Vaud Council, voted against. But his group failed to persuade the Greens to say no.
Next to Michaud was only the Minister of Economy Parmelin. On Tuesday he rejects the change, saying the previous rules worked. Above all, he stressed that the cantons are against liberalization and that the current Swiss rebate rules are standard in the EU.
What’s next for Conforama?
It is unclear how Conforama will proceed concretely. The company promises improvements. However, he says he “absolutely cannot understand” how the court fined him 1.5 million francs. “Complaints – prices in strikethrough – about less than a hundred items.”
“It was completely impossible for these few products to generate 1.5 million profits for Conforama,” a company spokesperson said on request.
The entire industry and the cantonal trade police are now waiting for this justification. What is the exact criminal offense and legal basis that led to this initial, hefty compensation payment of 1.5 million francs? Conforama’s lawyers declined to provide further information on Tuesday. The court told the “Handelszeitung” that the decision would be sent “within four weeks”. Muzaffer Vaud Public Prosecutor also did not provide any information on how he voiced the price violations and evaluated them as legal.
Discount cheats are common
It was Sophie Michaud’s French-speaking Swiss organization, the FRC, that led to the Conforama lawsuit being filed in 2018. The association researched discount practices and saw many scams, some of which were on sale too often and for too long. So the FRC read Conforama. Four years later, the responsible prosecutor sneaked into the shops and found similar abuses in random samples. This has led to criminal prosecutions that are now public speaking for unfair competition against Conforama.
Other retailers were also convicted of price fraud, despite very small fines. Because the law says so.
- 2018 Ochsner Sport: The provider only paid a fine of 4,000 francs. The FRC reported the cheating.
- 2020 Fust and M-Electronics: Fines of 4,000 and 3,000 francs, respectively. The FRC reported the cheating.
- In 2021, the State Secretariat of Economic Affairs (Seco) conducted a survey of online stores and found incorrect information on every second discounted product checked (out of a total of 644). Seco did not say who the companies were. In 2022, only “Saldo” magazine announced the results: Lipo, Livique, Möbel Pfister, XXXLutz, Decathlon, Vedia, Dell, Brack and Coop Bau + Hobby are responsible. The newspaper “20 Minuten” reviewed the cases in its own investigation and found that only some of the companies seized by Seco were required to pay under criminal law.
“The current regulation on discount prices does not have a deterrent effect,” National Assemblyman Michaud Gigon criticizes. “You can include ridiculously low penalties in the price calculation and make false statements about the business model.” He accuses Conforama of this as well. But Michaud is not closed to modernizing the discount rules. But he says the new rules should stop unfair competition and prevent consumers from being misled.
According to Michaud Gigon, the compensation payment ordered by the Lausanne court should have a deterrent effect for the first time. “I hope it will go up against higher courts,” the consumer advocate says. Seco and the Swiss Retail Federation did not want to prosecute the case.
This article was originally published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was originally published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
