How long can a discount last? The court has now taken a new view on the issue of long-term discounts

The Regional Court in Pilsen has annulled a decision of the Czech Trade Inspection Authority, which had fined a shoe retailer for labelling long-term discounted goods as “discount.” The court disagreed with the Czech Trade Inspection Authority's view on the issue of duration of discount promotions and provided guidelines on how to assess discounts based on their duration. 

Case background

The Czech Trade Inspection Authority fined a small shoe retailer for offering two pairs of shoes at a discount for several years due to clearance sales. According to the long-held view of the Czech Trade Inspection Authority, a discount should be seen as a short-term special promotional sale lasting a few days or weeks.  If goods are offered at a reduced price for a longer period, it is not considered a discount but a long-term price reduction. 

The fined shoe retailer disagreed with this interpretation and brought an action with a court. The court sided with the retailer and annulled the decision of the Czech Trade Inspection Authority.[1]

The court's position on the issue of the duration of a discount

According to the court, there is no legal, judicial, or doctrinal basis for the blanket conclusion that a discount must be a short-term special promotional sale. The court stated that the information about a discount cannot be assessed solely based on the labelling of the goods with the discount information but one must also consider other circumstances under which the goods are offered to consumers and how the discount announcement will affect consumers in each specific case. As an example, the court highlighted that the average consumer's expectations regarding the nature and duration of a discount promotion will differ between a supermarket, where many items are marked as discounted, and a small, specialized store.

Therefore, labelling an item with the word "discount" does not necessarily imply a short-term price offer. The court summarized that under certain factual circumstances, a consumer might perceive a discount as a long-term price reduction, for example, due to the clearance of previous models.

In this specific case, the court determined that given the size and nature of the store, the placement and design of the discount labels on the goods, and the overall circumstances of the offer, the presentation of the discount could not have created the impression of a time-limited promotion or pressured the average consumer into making a quick purchase. The court concluded that the average consumer perceived the labelling as a clearance sale of the last items, rather than a short-term discount promotion.

Implications of the judgment 

The future impact of the judgment will depend on whether the Czech Trade Inspection Authority files a cassation complaint with the Supreme Administrative Court.  If the Supreme Administrative Court upholds the judgment, its conclusions would become binding for other courts, which would have to consider them in similar cases. Unlike this judgment, judgments of regional courts do not have such a unifying effect. We will see how the situation develops. In any case, the judgment at least opens the door for further discussion regarding the duration of discounts.

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