In the final sprint towards euro adoption, the government has issued a new Legal Notice which is the latest addition to the list of initiatives launched to ensure that the transition to euro is in fact a smooth one. Legal Notice 369/2007 emerged following detailed analysis of experience on the ground on one of the main points that has been a bone of contention for the last few months, namely the smoothing of prices.

As the term itself implies, smoothing is the process whereby an ‘awkward’ price is rendered easier to use by effectively changing the price of the product, albeit to a very limited extent. Irrespective, government has taken the necessary measures to ensure that the consumer is protected and that the change of currency will not lead to abuse or increase in prices.

Smoothing should not necessarily cause alarm considering the fact that prices are not always ‘smoothened up’, as is perhaps the most common perception.

Nevertheless, it is imperative that all efforts must be made to ensure that if smoothing is to take place, it should not, in any way whatsoever, be to the detriment of the consumer.

Government has taken the lead in this respect. As far back as January, the government took the decision to smoothen in favour of consumers all fees of office, fines and other monetary amounts. These will now be published under a new set of legal notices amending current laws as from January.

The fact remains that euro adoption should not motivate a change in the value of a given product or service. Prices must be converted at the fixed rate of 0.4293 and rounded to the nearest euro cent. However, it is also understandable that prices need to be structured in a way that allows for ease of use, practicality and the provision of good customer service. These requirements might give rise to the need for ‘smoothing’.

Such a situation begets the need for a carefully structured process that ensures that smoothing does not lead to a rise in prices, whilst at the same time respecting the needs and rights of both retailers and consumers. It was for this reason that government took tangible steps to ensure that while smoothing is acceptable, it should only be in favour of the consumer, with the alternative being for the retailer to leave the price the same.

Therefore, the Legal Notice in no way obliges retailers to discount their prices but does ensure that if a change is to occur it does not impact negatively on price levels and result in unfair prices to consumers. This particular concept can be illustrated by taking the example of smoothing the prices of a typical snack enjoyed at a local restaurant, in accordance with the Legal Notice: (see table)

The new regulations also provides for the possibility that certain technical restraints may cause particular difficulties in smoothing prices in full conformity with the requirements outlined above. Such is the case, for example, of vending machines which cannot accept the smaller denomination coins. Under particular circumstances and following a formal application, the Euro Observatory may grant specific permission for smoothing to take place in a different manner, although each application will be taken on a case by case basis and merited according to the particular situation.

It is also important for retailers to bear in mind that the Legal Notice does create some obligations which must be adhered to and fines will be imposed on in those cases where such obligations are persistently disrespected, despite the three-step warning process employed by the Euro Observatory.

Consumers are also being empowered by this new development in the law and have the right – or perhaps one could even go so far as to say the responsibility – to report any abuse perceived with regards to the smoothing of prices. With the framework now in place to ensure a smooth changeover, it is important that each stakeholder lives up to their social responsibilities and ensures that euro adoption is carried out in the way it should be – efficiently, effectively and for the good of society at large.

The NECC’s national helpline, Linja Ewro 154, is open to receive calls and provide the assistance required from Monday to Friday between 8am and 5pm. An alternative method of communication would be to email our team of information officers on [email protected].

Claire Azzopardi is Information Officer with the National Euro Changeover Committee