Wed, Oct 03, 2001 page21

• Germany abolishes its old retail laws

  TIME TO HAGGLE A new economy is breaking old walls in Europe. A new freedom has reached German companies and consumers this summer. The government of Chancellor Gerhard Schroder has revoked Germany's Act of Discounts, which prohibited discounts and rebates for the last 70 years.

  • By Stephanie Ernst / EDITED BY STEFFEN S. PEDERSEN
  • • 
    • 
    • 

  A new freedom has reached German companies and consumers this summer. The government of Chancellor Gerhard Schroder has revoked Germany's Act of Discounts, ("Rabattgesetzt") which prohibited discounts and rebates for the last 70 years. This legislation was unique among European nations, and its abolition paves the way for better competition and market access for firms of all countries.

  The "Reichs Discounts Act" was first enacted in May 1933 by the National Socialists to regulate what the "Reichs" economists called "the unpleasant state of competition."

  During the Nazi era German tradesmen were meant to be protected against competition from Jewish business people and therefore, the Act of Discounts made it illegal for a company to reduce the price of a good by more than 3 percent from its initial price.

  In the 1950s the Legislature decided not to abolish the law after reaching the conclusion that it contained no inherent National Socialist ideology, despite its original purpose.

  From then on small- and middle-sized companies benefited most from these regulations as they protected them against hard-price competition from big retail companies.

  As a result, Consumer Councils and big retail companies have been arguing for the law's elimination for decades, but until recently without success. The failure was mainly due to the ability of the smaller and medium-sized companies to effectively lobby German politicians. The most recent example of this coming in 1994.

  But today the internet is putting new pressure on the German economy and legislation. The Act's regulations did make sense as long as choice was limited and consumers less sophisticated.

  In the time of e-commerce, however, the old laws designed to protect German trade now seemed to create substantial disadvantages for German trade and companies based in Germany.

  While German companies respected the Act, foreign companies did not think they were breaking the law by distributing their products by internet under conditions accepted in the rest of Europe. The most famous example is the internet company Letsbuyit.com based in Amsterdam, which operates in 13 European countries. The on-line retailer allows groups of costumers to buy products on its web site in bulk.

  Thereby, the charged price for a product decreases as the number of shoppers who enlist to buy that product increases.

  One year ago German judges decided that this violates the old German Act of Discount. But there was one problem: Letsbuyit.com did not violate EU Law. The problem of the Act of Discount was thus not only its being outdated, it did not blend with EU's e-commerce directive either, because it lead to unequal treatment of e-business models in different member states.

  In a uniting Europe, the EU's e-commerce directive allows e-commerce companies to operate anywhere in the EU according to the laws of the country where they are headquartered.

  Germany has still to transfer the directive into German Law but the government's new e-commerce Law is due to be discussed in the so-called "second reading" in the parliament this month.

  In the context of the e-commerce directive the Act of Discount had even seemed to become a threat for jobs and taxes in Germany.

  German e-tailers that were not allowed to sell discounted products at home could simply move or relocate abroad and carry on as before.

  But German Fair Trade Law and Competition Law, which can be compared with Taiwanese Fair Trade Law, still rules fair competition in Germany.

  And after all, the 68 year existence of the Act might have bred a culture in Germany where it is considered impolite, or worse uncivilized, to question the price.

  That's why German newspapers like the mass-circulated "Bild" has begun to tell German consumers to haggle.

  So, let's see if the abolition of Discount Act won't change German shops into a Turkish bazaar -- or even a Taiwanese nightmarket!
• Most Popular

  • 1

    Central bank announces banknote redesign plans

  • 2

    Japan deploys long-range missiles close to China

  • 3

    CDC reports COVID-19 variant case

  • 4

    KMT chair accepts trip invite from Xi Jinping

  • 5

    New streamlined Taiwan Pass to go on sale today