Obligation to indicate the basic price of cosmetic products

Category: compliance Industry: healthcare, cosmetics Author: Year:

The situation at the outset

In its judgement of 23 March 2017, file no. 13 U 158/16, the Higher Regional Court in Celle made an adjudication in respect of the obligation to indicate the basic price of hair serums and anti-wrinkle creams. The subject of the proceedings was a legal battle between two competing cosmetics manufacturers who were selling their products on the Internet. The parties took differing views on the question of whether or not the basic price of cosmetic products had to be indicated in advertisements too as a matter of basic principle. 

Judgement of the Higher Regional Court in Celle

The Higher Regional Court in Celle determined that the obligation to indicate the basic price was to be derived from Section 2 of the Regulation on the Indication of Prices (PAngV), which states that anyone offering goods to consumers must indicate the basic price as well as the total price. In the case of cosmetic products, according to § 2 (3) of the PAngV, the unit of quantity for the basic price is usually 100ml or 100g. 

Having said that, the necessity of stating the basic price may be dispensed with in the advertising of cosmetic products. This is always the case if the basic price and the total price are the same (though this was not so in the case to be decided by the court in Celle).

Another recognised exemption is cited in Section 9 (5) 2. of the PAngV, according to which the obligation to indicate the basic price ceases to apply in respect of ‘cosmetic products which serve exclusively to colour or beautify the skin, hair or nails.’

Starting with the term ‘exclusively’, the court in Celle placed a narrow interpretation on this exemption clause. The court argued in favour of using it restrictively, also referring to the above-mentioned example of hair colouring. Cosmetic products, judged the court, the effect of which did not make itself felt until after regular use over a significant period of time or was achieved by first stimulating functions of the body itself, or cosmetic products whose purpose was the care of skin, hair or nails, were not covered by the exemption defined in Section 9 (5) 2. of the PAngV. As well as the ‘exclusively’ beautifying effect required according to Section 9 (5) 2., the actual case in question also involved the stimulation of the body’s own functions and also a care effect. The need to indicate the basic price could only be dispensed with if the cosmetic product had no other function than that of beautifying the user’s outward appearance.

Recommendation

On account of the relevance of correct mandatory information on cosmetic products or their advertising materials under the law of competition, manufacturers of cosmetic products should take their obligation to indicate the basic price seriously in order to avert actions for injunction from competitors, which can be costly and time-consuming. 

[July 25th, 2017]