C&A faces fines for German discounts

German sources claim that lawyers advising the company, which now faces huge fines, should have foreseen that the offer would contravene German retail law.
The week-long offer, which gave consumers paying by credit card a 20 per cent discount, fell foul of paragraph 7 of Germany's unfair competition law, which bans discounted sales outside well-defined periods.
After a complaint by the Association for the Fight Against Unfair Competition, a Düsseldorf court ordered C&A to withdraw the scheme.
However, C&A ignored the injunction and sought to appease the criticism by extending its offer to all customers. This prompted a second injunction, which again the company ignored.
It now faces a fine of up to y250,000 (£154,200) for each separate breach.
C&A was advised in-house but private practice lawyers say that it should have sought external advice before going ahead with the discount scheme. “It lost both cases and I don't think it's been advised well,” said one Cologne-based lawyer.
However, Allen & Overy competition partner Wolfgang Witz said that the courts were very strict and the action has brought consumer law to the forefront of debate. Free-market opposition, Free Democrats (FDP), has called for changes to the law.
It is arguing that the judge's decision against C&A has resulted in higher prices for consumers and that this proves there is a problem with the law. It is calling for the abolition of paragraph 7 in the interest of consumer protection. But Witz said that there is a certain value to the provision. “Discounts allow the retailer to set higher prices. We shouldn't allow merchants to make customers believe they are receiving a discount when it's not real,” he said.