Polish competition and consumer protection under continuous amendments
On 16 October 2015 yet another extensive amendment to the Competition and Consumer Protection Act was published in the Polish Journal of Laws, which will enter into force in 6 months. The amended act equips the Office of Competition and Consumer Protection (“UOKiK”) with very powerful new tools, a result of the continuous focus on eliminate miss-selling of financial products and other consumer abuses.
The amendment was a joint initiative of the UOKiK, Ministry of Finance and Ministry of Justice. Although it underwent extensive public (industry focused) consultations, the entire legislative process was fast-track and lasted a total of less than half a year from the publication of first legislative proposal.
The new Competition and Consumer Protection Act will prohibit the offering of financial products which are not suited to consumer needs. New provisions will enable UOKiK to publish free messages and warnings in public radio and television in order to quickly and effectively inform consumers of market behaviours which infringe the cumulative interest of consumers. Moreover, UOKiK will have the power to issue an opinion in relation to in-court proceedings in any individual case, where the consumer interest mandates such an action.
Another set of changes will be introduce to procedural aspects of consumer protection. The new control procedure in respect of practices which allegedly infringe collective interest of consumers will now be initiated ex officio or at the request of consumer, consumer’s legal representative, the Insurance Ombudsman or any consumer organization. The President of UOKiK will assess the abusive character of a clause or practice and will have the power to ban its further use. However, such a decision will be effective only with regard to the undertaking which applied such a clause or practice and in respect of all the consumers who contracted such an undertaking under the relevant clause or practice. Furthermore, the President of UOKiK will have the power to impose different administrative penalties and remedies – i.e. order certain actions the undertaking shall take to remove the consequences of applying an abusive clause in a consumer contract (e.g. inform consumers about the decision in a public or direct manner). According to the new leniency provisions, the undertaking found in breach of the consumer protection provisions will escape the penalty (up to 10% of its turnover), if it independently undertakes to alter the practice (i.e. eliminate its abusive character).
Furthermore, the new Competition and Consumer Protection Act will introduce the institution of a so-called “mystery shopper”. This will allow UOKiK to obtain evidence concerning practices infringing collective consumer interest and verify information provided to consumers on a pre-contractual stage. UOKiK will be allowed to engage a "mystery shopper" only subject to a judicial order and only for the purpose of verifying the means applied by the undertaking in offering a product or a service or the procedure applied for concluding consumer contracts.
Another, supposedly the sharpest, new tool in the UOKIK’s arsenal, will be the authority to impose temporary injunctions in the course of pending control proceedings. Once imposed, such an injunction will remain in force until the issuance of a final decision. Imposing temporary injunctions will allow UOKiK to react quicker, whenever the collective consumer interest is at stake. At the same time, it will be a powerful tool which could cause grave losses to scrutinized undertaking, in some cases unjust ones.
It shall be underlined that it is a second round of major amendments to the Competition and Consumer Protection Act within the last 12 months. The first round came into force in January 2015 and introduced the long-awaited and hugely debated amendments, aiming at deformalization and simplification of various procedures. It introduced new procedures for merger control and improved the available measures to combat collusion. Thus, the trend has been visibly for the increased effectiveness of preventive measures, enforcement mechanisms and remedies. On the other hand, aside these powerful tools for competition and consumer protection, UOKiK has made a turn for an open dialogue, direct communication with enterprises and transparency of its activities. Not only by virtue of new obligations imposed by the recent amendments, but also due to its internal policy changes. A step which has visibly invited more entrepreneurs to cooperate more openly with UOKiK and its representatives.
Any questions? Please contact: Marta Smolarz or Marta Borowska
Practice Group: Antitrust & Competition