Who: The Appeals Tribunal of the Dutch Advertising Code Committee (the Tribunal) and KLM
Where: The Netherlands
When: 13 December 2018
Law stated as at: 31 January 2019
Once a year, KLM runs a popular two week campaign called “World Deal Weeks”, during which KLM greatly discounts its tickets.
A consumer filed a complaint with the Dutch Advertising Code Committee (ACC), stating that KLM had been misleading its consumers by increasing the price of the tickets just before the World Deal Weeks starts. According to the consumer, KLM’s advertisements are misleading as KLM advertises with discounted prices compared to increased “strike-through” prices.
The consumer substantiated its complaint by handing over two screenshots of prices of a ticket to Curacao on the same date, showing a difference in price of EUR 100 during the World Deal Weeks compared to the previous two weeks.
KLM stated that the differences in price are the result of KLM continuously changing its prices in order to compete against competitors. More often, KLM runs promotional campaigns for individual destinations. According to KLM, a promotional campaign for Curacao was running in the two weeks before the World Deal Weeks, causing the price differences for a ticket to Curacao. KLM argued that the “strike-through” price in the World Deal Weeks was the original price for a ticket to Curacao, and thus not misleading.
ACC and the Tribunal’s ruling
The ACC found that the average consumer would interpret the “strike-through” price in KLM’s ad as the standard price for a ticket. The ACC ruled that KLM suggested a greater price advantage in its advertisement, which qualifies as misleading and unfair advertising under the Dutch Advertising Code. The ACC’s ruling was upheld by the Tribunal, as KLM was unable to provide sufficient evidence that the prices increases weren’t misleading.
Why this matters:
The ruling indicates that the practice of increasing prices just before running a promotion is generally regarded as misleading and unfair. This is especially true if advertisers are unable to demonstrate that the strike-through price is a fair reflection of the standard price of the product or service. Advertisers should be transparent in the way they frame their deals, and avoid unrealistic offers without providing additional context.