Trust them, they know what they're doing

On my visits to the US, I usually end up spending some time and money in various electronics stores to stock up on various electronic gadgets and toys. The price differences can be substantial so it's worth a try. There's always some good deal to be found with a whole raft of rebates on certain products. Best Buy is kind enough to print all the material you need for their rebate at the check-out; CompUSA gives you only one copy of the receipt, so you have to make another copy yourself to send in for the rebate. Shopping around for the best deal and comparing marked-down prices, rebates and juggling price-match guarantees are all a normal part of shopping in an environment where competition thrives. So while you're picking your way through the new tradition of pre-Christmas sales, spare a thought for the Germans. You see, offering rebates and discounts in Germany is illegal.

The bizarre world of Germany's Unfair Competition Law (known by its German acronym UWG) has been created in the name of protecting consumers. It's only since last summer than German retailers can offer some kinds of rebates on articles, while they can have sales only twice a year. The Frankfurter Allgemeine explains:

The UWG has some features that may strike foreigners as curious. It contains, for example, a ban on the “exaggerated luring“ of customers and certain restrictions concerning the size of the discount that can be offered. Its most controversial section forbids merchants from announcing that sales will remain in effect for only a limited period because the prospect of a looming deadline for the expiration of a special offer could put “psychological pressure“ on customers. Retailers are allowed to reduce prices for a limited period of time, but only if they do not previously announce that the reduction will be temporary.

For instance paragraph 7 of the UWG specifically outlaws extraordinary retail activity that serves the acceleration of turnover and that gives the impression of bestowing special deals on customers. The applicability of this law goes beyond rebates and discounts, as it can be and has been applied to innovative retailers who sought a competitive edge. For instance, not too long ago the owner of a kiosk in Berlin had the idea of stimulating sales by accepting once again German marks. There's still an enormous hoard (estinmated at 8 billion euro) of marks in people's possession. In any case, he quickly fell foul of the UWG and was ordered to pay a fine. The clothing chain C&A is now running a promotion this week accepting marks too. Since they had deeper pockets and afford lawyers, they actually won the case and can now legally use the acceptance of marks as a competitive advantage. The UWG is is not a law against unfair competition, it's a law against compeition in general. The law was made by people who think all competition is unfair.

In an article on this year's Christmas shopping, the FAZ explains the kinds of things the retailers are trying to do within the limits of the current law, but many are operating in a legal gray area anyway. With the economy as depressed as it is, retailers are eager to get any advantage they can in their bid for consumer euros. It looks like this is going to be the best bang-for-the-buck shopping season in Germany in ages, but not everybody is happy with this. The largest labor union, going by the incongruous name of Verdi, is riding into battle against the discounts and the sales, lobbying to prevent any further relaxation of the UWG. Quoting from the article:

Verdi has demanded an end to retailers' current discount frenzy and seeks to prevent amendments to the German law against unfair competition, which retail lobbyists favor. “We need regulations because the market alone clearly isn't capable of putting an end to this nonsense,“ said Wiethold, adding that if the year 2003 turned out as bad as 2002, several big companies would be on the brink of insolvency.

"This nonsense" is a great boon to consumers, and considered perfectly normal everywhere else. I don't understand why the union would be opposed to this. It seems Verdi is acting out of reactionary reflex against anything that could be called liberalization. As in many other countries, the labor union have long since stopped being the champions of a downtrodden working class, but have turned into political support groups for left-leaning parties. Three-quarters of SPD members of parliament are union members, so the positions that the unions take do matter directly in politics.

The UWG also applies to areas that are not directly connected to price. The services that retailers offer can also violate the law. One famous case is the Land's End guarantee, which was ruled illegal in Germany. Showing complete confidence in your own product is in the eyes of the German law also an act of unfair competition.

But think of the vision of consumers that the UWG has: apparently, people are so helpless, so stupid, so feeble-minded that they can't resist spending money when a nefarious retailer dangles a discount before them. You're not allowed to say when any rebates end, because that might put psychological pressure on shoppers. Of course it does! But that's only a bad thing if you think shoppers can't decide for themselves whether they make use of the current sale, or whether they'll wait for the next one. The UWG is a prime example of an authoritarian, elitist mindset, that simply can't conceive of "Them, the People" being sufficiently resourceful to fend for themselves.

Actually, even this is a very benign reading of the mindset of the framers of these laws. The UWG has survived more or less intact since its introduction in 1933 when the Nazis introduced the unfair competition law to protect the Master Race from manipulation by the evil Jewish shopkeepers. It's sad that such a vile anti-semitic piece of legislation has been able to survive this long, even if stripped of its original intent. Less surprising is that the law appeals to those with a collectivist instinct even now.