Belgium in court over loyalty card ban

Retailers' loyalty cards, which are an increasingly popular method of offering benefits and discounts to supermarket customers in a bid to 'buy' their continued custom, are currently banned in Belgium, a restriction which the European Commission believes contravenes regulations on the single market.

The Commission has therefore decided to take Belgium to the European Court of Justice to force it to overturn the ban.

In a statement, the Commission said that the Belgian law on trading practices prevented the issuing of loyalty cards that enable consumers to accumulate points when making purchases from different suppliers and later exchange them for free products and services or price reductions.

While in practice such loyalty schemes often operate on the Belgian market despite the legal ban, the ban itself nonetheless has the effect of restricting the free provision of services within the EU, to the detriment of consumers and businesses alike, the statement continued.

"Belgian consumers are thus denied benefits enjoyed by other European consumers. At the same time, businesses, whether they are established in Belgium or elsewhere in the European Union, are unable to offer loyalty schemes which they operate in other Member States, or to set up such schemes at European level,"​ the Commission said.

The referral of Belgium to the ECJ follows a lengthy confrontation between the Commission and the country, which began as a result of a complaint from a company wishing to set up loyalty schemes in Belgium on behalf of various enterprises supplying goods and services.

The Commission initiated infringement proceedings against Belgium back in March 1999, but Belgium has refused to change the 1991 legislation, which prohibits offers whereby a seller links the acquisition (free of charge or otherwise) of products or services to the acquisition of other products or services - the very essence of loyalty card schemes.

"In some cases, this limitation on the use of loyalty schemes denies Belgian customers the possibility of obtaining gifts or discounts on different purchases, and deprives operators from other Member States of scope for using an effective means of promoting customer loyalty. This also restricts scope for companies specialising in the organisation of such loyalty schemes to provide their services to operators established in other Member States but engaged in the provision of services in Belgium,"​ the Commission's statement continued.

The Commission also disagrees with Belgium's contention that the regulations are designed to protect consumers, prevent unfair trading practices and stop unfair pricing practices, saying that the restrictions imposed upon the market by the legislation are too heavy-handed.

The court case falls within the framework of the Commission's drive to change the EU regulations governing sales promotions - proposed new legislation to this effect was adopted in October 2001 and is currently being discussed by the Council of Ministers - which sets out to remove bans on different types of sales promotion, replacing them with obligations to provide consumers with information.