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Manufacturer's Suggested Retail Prices and astronomical prices

On Ebay and in many online shops, numerous vendors – especially of watches and jewellery- like to put arbitrary Manufacturer's Suggested Retail Prices in their offer. Their goal is to make the customers believe it is a bargain and con them into purchasing their products. However, the vendor should be careful using such price indications and be certain they are justified.

Otherwise, the company could be accused of using astronomical prices. Astronomical prices are understood as exorbitant prices and deliberately inflated Manufacturer's Suggested Retail Prices in this context. They enable the vendor to give the customers the impression they are saving a lot of money due to grossly inflated prices that have been "reduced".  Although this may sound obvious, it should be pointed out here: As a reasonable consumer price, the Manufacturer's Suggested Retail Price, must be based on seriously derived calculations by the manufacturer.

After all, the consumer assumes that the retailer price is not an arbitrary fantasy price, but a standard price commonly used on the market. Also price indications using the term”regular price” can be considered ambiguous. It is not clear what is meant hereby: the suggested price, the fixed price or the vendor’s own former price.  The Manufacturer's Suggested Retail Price is a problem particularly when the suggested price can no longer be imposed on the market.

According to German law, an unjustified “astronomical price” gives the customer a false impression of an exceptional offer. This is particularly relevant if the MSRP is remarkably undercut by a majority of retailers on the market. Hence, it is strongly advisable to pay attention to the exact wording when advertising with MSRP. An astronomical price can constitute an act of deceptive pricing and is anticompetitive pursuant to §§ 3 and 5 Act Against Unfair Competition.  For the operating company, the moment of truth will come in court at the latest. If a competitor, the Centre for Protection against Unfair Competition or a consumer association accuses a company of astronomical prices by sending them notice and making an application for an interim injunction, the company has to prove if and in which period the MSRP was charged. Most companies would have difficulties doing so.

Taking legal steps to prevent illegal advertising practices is one thing. Acting with caution, being wary of temptations by what are claimed to be reduced prices is equally as effective. We would like to recommend to anyone, who wants to help to disarm dubious companies to fill in the web form of the Centre for Protection against Unfair Competition, by accessing the following link: