Legal risks associated with lowest price guarantees

A lowest price guarantee is commercially powerful but must not be misleading: too many hidden thresholds and exceptions make the guarantee unfair and can lead to complaints to the ACM or the Advertising Code Committee. Furthermore, if you use parity or best-price clauses towards suppliers or platforms, the cartel prohibition looms. Below, you can read about the legal risks involved and how to correctly implement a lowest price guarantee.

What is a lowest price guarantee?

With a lowest or best price guarantee, you promise the customer the lowest price — although this by no means always has to be at a national or global level. After all, you can attach conditions to such a guarantee. Examples:

• the lowest price within a radius of, for example, thirty kilometers around the store;
• the warranty only for a limited number of products or for products with a specific quality mark.

The “fine print” therefore determines when you do and do not have to guarantee the lowest price. It also tells the consumer what to do if they discover a lower price elsewhere — and how you respond to that. For example, you can adjust the price after all or give the product away for free as compensation.

A lowest price guarantee must not be misleading

A best-price guarantee can win over consumers, but be careful. The Authority for Consumers & Markets (ACM) has previously referred to these as “nonsense promotions,” and the Advertising Code Committee (RCC) has ruled in the past that such guarantees can constitute an unfair form of advertising. By applying too many thresholds and exceptions—and hiding them well—the guarantee can become unfair.

Consumers who feel misled can file a complaint with the ACM or the RCC. In the past, the Consumentenbond has exposed many such actions and submitted them to the RCC.

The message is clear: if you opt for such a guarantee, do so sincerely and do not take the consumer for a ride.

Parity clauses and the cartel prohibition

Deception is not the only risk. A well-known example is the parity clauses in agreements between Booking.com and dozens of German hotels. Such a clause prohibits hotels from offering better conditions elsewhere, allowing the platform to guarantee the best price. These agreements are also known as best price clauses or MFN (most favoured nation) clauses.

The Amsterdam District Court referred the question to the Court of Justice of the European Union as to whether these clauses fall under the cartel prohibition. Earlier, in 2015, Booking.com had already modified the clause under pressure from European competition authorities and received a fine from the German competition regulator, which was confirmed by the highest German court in 2021. TODO_VERIFY: the legal assessment of parity clauses has crystallized further since then — check the current state of case law and competition law before relying on this.

What should you look out for?

• Be transparent about the conditions; do not hide thresholds and exceptions.
• Make it clear in advance what the customer must do if a lower price is found elsewhere, and what your response will be.
• Ensure that the guarantee is enforceable and sincere.
• Be cautious with parity/MFN clauses: they may violate the cartel prohibition, whereas they are sometimes precisely necessary to guarantee the lowest price.

Frequently Asked Questions

Am I allowed to attach conditions to a lowest price guarantee?

Yes, provided they are transparent and not misleading. You may, for example, limit the guarantee to a region or specific products, as long as this is clear to the consumer.

When is a lowest price guarantee misleading?

If you apply so many thresholds and exceptions, or hide them away so effectively, that the guarantee amounts to very little in practice, this may constitute unfair advertising, and consumers can file a complaint with the ACM or RCC.

Are parity clauses prohibited?

That depends on the circumstances and the type of clause. They may affect the cartel prohibition. Have such agreements legally reviewed in advance.

To whom can a consumer complain about a misleading price guarantee?

At the Authority for Consumers & Markets (ACM) and the Advertising Code Committee (RCC).

Legal advice regarding lowest price guarantees?

A lowest price guarantee can attract many customers, but an incorrect setup leads to complaints or antitrust issues. Therefore, have your promotional terms and any parity clauses checked in advance.

Our commercial and contract law are happy to assist you. Would you also like to get your general terms and conditions in order? Schedule a no-obligation intake consultation.