Sale of electrical appliances without VAT?

The Federal Court of Justice (BGH) had to decide whether an advertisement with the content 'Household large appliances without 19% VAT for today only' constitutes an improper influence on the consumer and is thus an unfair business practice.

On 4 January 2007, shortly after the VAT rate was raised from 16% to 19%, an electrical retailer advertised on the Internet with an advertisement containing

'Household large appliances without 19% VAT for today only'.

Corresponding advertising for CDs, DVDs and software titles was then published the next day, 5 January 2007, in the Stuttgarter Zeitung.

A competitor of the electrical retailer, who also trades in household appliances, subsequently objected to this advertisement as improper influence on the consumer and thus as an unfair business practice. He argued that the offer had only existed for an inappropriately short period of time, with the result that at least working consumers were no longer able to make a price comparison due to the time pressure thereby created.

The Regional Court (LG) Stuttgart prohibited the electrical retailer from advertising with the statement 'Without 19% VAT' provided that the announcement was for a single sales day which was identical with the publication date. The appeal against this decision (judgment of 17.04.2008 – Az. 2 U 82/07) was unsuccessful.

Court decision
In itsjudgment of 31.03.2010 – Az. I ZR 75/08 the Federal Court of Justice (BGH) reversed the appellate decision of the Higher Regional Court (OLG) Stuttgart and dismissed the action.

The price reduction was offered for the entire opening hours on a weekday. The advertised articles – household large appliances, CDs, DVDs and software – are generally available on the market in sufficient quantities and are easily accessible. Consumers can easily obtain a price overview via the Internet as well.

Even if they should not have the opportunity for a detailed price comparison, they would not make reckless purchasing decisions based on the advertisement alone. This does not, however, preclude the possibility that individual consumers may decide to make a purchase even without a (complete) price comparison and thereby risk missing an even cheaper offer from a competitor of the electrical retailer. However, this situation is not unusual, as it frequently occurs that consumers decide to make a purchase at short notice without carrying out a comprehensive price comparison. If the consumer decides to make a purchase without such a comparison, he acts deliberately and voluntarily accepts the said risk.

In the case of expensive items where the purchase costs potentially represent a considerable investment, the consumer will in any case, according to experience, only make use of the offer after careful consideration. In the case of cheap offers, the average consumer will not be attracted in such an exaggerated manner as to make reckless decisions.

Conclusion

This decision of the Federal Court of Justice (BGH) represents a departure from previous case law, as in 2002 it had rejected the permissibility of discount campaigns limited to one day in another decision.

Now it speaks in favour of their permissibility and relies on the possibility of obtaining a price overview online, although only just under three-quarters of the population have access to the Internet. Regardless of the value of the respective goods, it attributes the failure to carry out a comprehensive price comparison to the risk sphere of consumers and thereby generally emphasizes their personal responsibility.

This case illustrates how important it is from an entrepreneurial perspective to take into account not only creative and economic, but also legal aspects when developing an advertising idea, whether in the form of a discount campaign or similar.