Non-binding (recommended) retail price?

Any person who offers goods or services to end consumers on a commercial or business basis, or who advertises goods or services to end consumers as a provider and indicates prices, must specify the final price, that is, the price to be paid by the consumer including sales tax and all other price components. The Federal Court of Justice (BGH) now had to decide whether this statutory provision deriving from the Price Indication Ordinance also applies to joint advertising by motor vehicle dealers.

The Association Against Malpractice in Trade and Commerce e.V. issued a warning to five Peugeot car dealerships because they had advertised in a joint advertisement in a regional daily newspaper as follows:

"Non-binding manufacturer's recommended price plus delivery costs. For the exact price, please inquire with your Peugeot authorised dealer."

The competition authorities took the view that the joint advertisement lacked the required specification of the final price and were successful both before the Regional Court (LG) and the Higher Regional Court (OLG) Cologne. The Peugeot dealers had these decisions reviewed by the highest German court.

Court decision

In its judgment of 12 September 2013 (Az. I ZR 123/12) the Federal Court of Justice (BGH) quashed the judgments of the lower courts in favour of the motor vehicle dealers.

A reference to a non-binding recommended price of the manufacturer in an advertising notice constitutes a concrete offer to purchase a motor vehicle with an obligation to state a final price only if the announcement is worded in such concrete terms in its content that, in the view of ordinary trade practice, it permits the conclusion of a transaction even from the perspective of customers without further ado. This is not the case where an advertisement is labelled "Non-binding recommended price", as such labelling precisely indicates the non-binding nature of the price and thus cannot mislead ordinary trade practice.

Conclusion

Where the dealer explicitly marks his offer "Non-binding recommended price", ordinary trade practice does not expect a final price. Where offers of goods or services are presented to consumers in advertising notices in very concrete terms, final prices must always continue to be specified.