January 16, 2025
Blog
Unpacking the Omnibus Directive: key impacts on retailers & online sellers
Maggie Allen
Senior Account Executive
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Everyone wants to know that they’re getting fair and clear pricing when they shop, but these assurances aren’t always guaranteed. The Omnibus Directive was meant to strengthen consumer protection in online shopping, but it also imposed new requirements on retailers and online businesses. The European Union’s Omnibus Directive went into effect in early-2020. At that point, consumers in the EU began to get more transparent information about price reductions—including pricing that was extended over the prior 30-day period.
This directive, which was developed to address unfair practices used by e-commerce business owners, affects both EU and US retailers and consumers. The purpose being:
- Protect consumers
- Enable fair competition for businesses
- Ensure price transparency during promotional campaigns
- Eliminate fake online reviews
- Prevent fake price cuts
For example, a retailer advertising a pair of $100 shoes at 50% off must list the shoes at $100, and even if the shoes were $129 on the day before the sales started. In essence, this prevents the retailer from increasing the product price just before a sale. This directive applies only to business-to-consumer (B2C) retailers. Failure to adhere to these regulations can result in legal action, fines, loss of consumer trust, and reputational damage—none of which are acceptable in today’s highly-competitive online marketplace. Non-compliance may also impede an organization’s shot at expanding in the EU market.
According to international law firm Bird & Bird, the Omnibus Directive was enacted to “strengthen consumer protection by modernizing existing EU consumer legislation and enhancing enforcement measures.” It also introduced general data protection regulation (GDPR)-style fines for certain breaches of consumer protection rules.
The new era of consumer protection
EU member states were obliged to implement the Omnibus Directive into their national legislation by November 2021 and begin enforcing it by May 2022. To date, 18 countries have adopted this consumer protection law. This collective action underscores the roust importance of consumer protection across Europe.
“The provisions of the Omnibus Directive are intended to fully harmonize consumer protection rules in EU Member States to a large extent,” Bird & Bird adds. “However, the Directive leaves some leeway for member states to go beyond the provisions and introduce stricter rules.” For example, member states can levy higher maximum fines for breaches of consumer protection rules and/or introduce additional transparency obligations for providers of online marketplaces.
New rules, new labels
In the current regulatory environment, both manufacturers and distributors are rethinking their labeling approaches, moving away from manual systems and leveraging cloud-based, end-to-end labeling solutions that can help them meet the directive’s requirements.
The Omnibus Directive's focus on providing clear, fair pricing data to consumers has also impacted how companies label their products. For instance, retailers may need to provide more “upfront information” about promotions, discounts and markdowns. Or they’re putting more effort into ensuring that pricing is visible, obvious and easy for consumers to use for comparisons.
Not only does product labeling play a crucial role in the customer experience, but it also helps companies comply with ever-changing regulatory requirements. Being able to quickly and easily adapt to new customer demands and regulations supports the efficient flow of goods through the supply chain. Any manufacturer, distributor or retailer of goods—both online and offline—need a flexible, unified, cloud-based labeling platform to help them meet these requirements.
By leveraging solutions from Loftware, which enhance labeling regulatory and compliance processes, companies can further increase efficiency and accuracy throughout their operations. Learn more about Loftware and how we can help your organization here.
- Cloud
- Regulatory
- Supply Chain