Belgian Retail Update - Postponement of the summer sales
Published on 8th May 2020
Each year, many consumers look forward to the sales period to find great deals. Sales which are strictly regulated by Articles VI.25 to VI.30 of the Economic Code are meant to take place every winter between 3 January and 31 January and every summer between 1 July and 31 July. Nevertheless, consumers will have to be a little more patient this year since it was announced in early April that the 2020 summer sales will be postponed in order to support retailers which were forced to close during the lockdown period caused by the coronavirus pandemic. No legislation has yet been published on this subject but two draft laws regarding the postponement of the sales are however pending before the Chamber.
Please note, for the latest update on the 2020 summer sales, read here.
Draft law of 16 April 2020 amending certain provisions of the Economic Code with regard to the registration with the Crossroads Bank for Enterprise and the postponement of the sales (the "First Draft Law").
The main measure is (i) the postponement of the sales but the First Draft Law also provides for two other measures to support businesses, namely (ii) the temporary relaxation of the registration requirements with the Crossroads Bank for Enterprise ("CBE") and (iii) the suspension of the Liquidation Period.
Postponement of the sales
The First Draft Law provides for the postponement of the summers sales to 1st August 2020 without modifying the waiting period, i.e. the one month period before the beginning of the sales during which the retailers in the clothing, shoes and leather goods sector may not announce price reductions or distribute discount vouchers.
It has been suggested to extend the waiting period to avoid a "price war" at the end of the lockdown period. However, it was not considered appropriate given the fact that (i) in practice, the waiting period is bypassed by the retailers (via tied sales or "word of mouth" discounts for example) and (ii) retailers have to face the competition of e-shops operating from abroad which are not subject to the Belgian law on sales. The extension of the waiting period would therefore constitute an additional burden.
It needs to be stressed that the waiting period is not compliant with the European Directive on Unfair Commercial Practices and two draft laws are currently pending in order to abolish the waiting period. This is another reason why it would not have made any sense to extend it. Nevertheless, in the event that the text abolishing the waiting period is adopted, the text provides for an entry into force six months after its publication. The waiting period for the 2020 summer sales will therefore still apply.
Temporary relaxation of the registration requirements with the CBE
Currently, pursuant to Article III.51 of the Economic Code, the registration with the CBE should reflect the effective activities of the registered company. In this regard, a company carrying out an activity which is not registered could face a criminal fine between €26 and €10,000 (amounts to be increased by the additional decimals/multiplied by eight).
The First Draft Law allows companies which temporarily modify their way of carrying out their activities, during the period when the restrictive measures to limit the spread of coronavirus are in force, not to update their registration with the CBE. For example, a restaurant which temporarily makes take-away meals during the lockdown period, does not need to request the registration of a new NACE code which allows it to save time and money.
Suspension of the Liquidation Period
Currently, pursuant to Article VI.23, §1 of the Economic Code, a company can only carry out liquidation sales for a limited period of five months (or twelve months when the manager of the company ceases any professional activity because (s)he has reached the retirement age) (the "Liquidation Period"), and any interruption of the liquidation sales do not have suspensive effect on the authorised Liquidation Period.
The First Draft Law specifically provides for the suspension of the liquidation periods that were ongoing at the time that the lockdown was decided, in order not to penalize the companies concerned.
The Second draft law of 22 April 2020 amending the Economic Code with regard to the 2020 and 2021 sales periods due to the coronavirus crisis (the "Second Draft Law")
Due to the fact that the lockdown period will probably last longer than initially expected, the winter sales period should also be adapted. In view of covering this, a second draft law was filed with the Chamber on 22 April 2020 in order to further postpone the sales period.
The Second Draft Law provides for the postponement of the summer sales 2020 to 15 August (until 14 September 2020) and the 2021 winter sales to 15 February (until 14 March 2021).
It only remains to be seen which text will be adopted by the Chamber.
Although these planned measures aiming at limiting the economic consequences of the coronavirus crisis for the retailers are positive, it is even more important that other concrete measures be adopted in order to make sure that retailers will be able to sell at normal prices and that consumers will be able and willing to return to the shops. At the end of the day, this is the foundation for economically restoring brick and mortar retail shopping.
In order to be informed of the possible measures that may be adopted by the government to help the retail sector to recover from the coronavirus crisis, do not hesitate to regularly consult our page or to contact our experts.