Guidelines for the Retail Sector on Price Promotions
Recommended Retail Price (RRP)
A recommended retail price (RRP) is the price recommended by the manufacturer, producer, or supplier of the product (other than the trader).
In circumstances where a product is being offered by a retailer at or below the recommended retail price, the trader should, under the Consumer Protection Act, give consideration to whether the RRP was made in good faith by the manufacturer, producer, or supplier.
A trader should consider whether the RRP is realistic. Whether or not he believes that the product will be sold at that price and he should also consider what is the selling price of items that are of a comparative nature and standard.
In practical terms the Agency believes that a true RRP is one recommended by a manufacturer to a retailer at a realistic price at which the product may be sold to consumers.
The underlying principle is that price comparisons with the RRP must not mislead the consumer and that the recommended retail price is made in good faith. In this regard, the following points should be taken into account:
- The RRP must have regard to the full cost of production, including marketing, distribution and sales;
- The RRP should not be pegged at an artificially high figure with the objective of giving retailers wide scope to make and advertise cosmetic or contrived discounts that do not reflect the actual value of the product;
- The RRP must take into account market demands and reflect the general market value of the product;
- Traders should not use an RRP if they know the product could not be sold at that price;
- The RRP should be set at a level that it could reasonably be expected that consumers would purchase the product at that that price;
- The time frame when the RRP was made should be relevantly recent i.e. within the most recent relevant reasonable period;
- The RRP must be realistic, and can only be made by an operator (other than the trader offering the product for sale); and
- The RRP should only be made by the manufacturer or supplier who has normal trading/commercial links with the trader.
In essence, in order to comply with the requirements of the Act, traders advertising products at prices below the manufacturer's recommended retail price must ensure that their advertising is not misleading and that they have taken all necessary steps to ensure that the price reductions are genuine including giving consideration to whether the manufacturer's RRP was made in good faith.
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