Covid-19 coronavirus: competition and consumer protection in Poland
Senior Professional Support Lawyer
03 April 2020
The new Polish Anti-Crisis Shield legislation, being the response to the Covid-19 crisis, introduces significant changes to competition law and consumer protection. Below we summarise what these newly implemented measures might mean both to entrepreneurs and consumers.
Maximum prices and margins
Under the Anti-Crisis Shield legislation:
- the Minister of Development can introduce the maximum prices and margins on retail and wholesale levels in relation to goods and services which are significant for the protection of human health or safety or for household maintenance costs;
- the Minister of Health can introduce the maximum prices and margins on retail and wholesale levels in relation to certain medical products, medical devices, food products for particular nutritional needs, medical raw materials and biocidal products, which may be used to counteract Covid-19 coronavirus or in the event of problems with their availability due to Covid-19.
The maximum prices and margins will be controlled by the relevant Inspectorates, including the Pharmaceutical Inspectorate, the Agricultural and Food Quality Inspection, the Sanitary Inspectorate and the Trade Inspection.
In case of a violation of the maximum prices or margins, the relevant inspectorate authorities can impose a fine from PLN 5 thousand to PLN 5 million. The fined undertaking must pay the fine within seven days from the day the decision became final. In case of repeated violations of the maximum prices or margins on a large scale or with respect to a large number of products, the President of the Polish Competition Authority (the President of the PCA) can impose a fine up to 10% of the undertaking’s turnover generated in the year preceding the year in which the fine was imposed. Furthermore, the President of the PCA can impose a fine of up to 5% of the undertaking’s turnover generated in the year preceding the year in which the fine was imposed, but not higher than PLN 50 million, in case the undertaking fails to provide the President of the PCA with requested information or provides incorrect information or prevents or hinders an inspection.
Under the Anti-Crisis Shield legislation, the time limits in administrative proceedings are halted. This means that in case of new merger notifications, time limits for issuing the decision will not start to run and they will be suspended for ongoing cases. However, this does not exclude the possibility a clearance decision being issued in such proceedings. For the time being, the President of the PCA has not published any official information or guidelines on how the Anti-Crisis Shield legislation will affect the timelines of the merger review proceedings in practice and how the President of the PCA plans to proceed with the new merger notifications or ongoing cases.
For the time being, the majority of case handlers work remotely. The PCA can be contacted as usual by email, phone, fax or regular mail. However, in-person visits are not available. Furthermore, the PCA currently accepts paper submissions in person, but it expects and strongly encourages parties to provide their submissions electronically or by regular mail.
There has been no official communication which would indicate that the PCA plans to temporarily relax competition rules eg in order to avoid supply shortages or strengthen the antitrust enforcement. Nevertheless, the European Competition Network (the ECN) in which the European competition authorities (including the PCA) are associated, issued a joint statement on application of competition law during the Corona crisis in which it indicated that:
- companies which have doubts about the compatibility of cooperation initiatives with competition law can reach out to the European Commission or the relevant national competition authority any time for informal guidance;
- the products considered essential to protect the health of consumers should remain available at competitive prices and the competition authorities will not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position;
- the existing rules allow manufacturers to set maximum prices for their products.
As indicated above, under the Anti-Crisis Shield legislation, the time limits in administrative proceedings are halted. With respect to antitrust proceedings this means that the time limits for procedural actions with set time limits will not start to run or will be suspended. For the time being, the President of the PCA has not published any official information or guidelines on how the Anti-Crisis Shield legislation will affect the antitrust proceedings.
Lower cap for non-interest credit costs
To maintain consumers' access to affordable credit, the Anti-Crisis Shield legislation will lower the cap for non-interest credit costs. Under the amended rules, the cap for agreements with a repayment period of 30 days or more will equal the sum of 15% (instead of 25%) of the total amount of credit and 6% (instead of 30%) of the total amount of credit for every year of the repayment period. For instance, the cap for a one-year credit agreement would be 21%, for a two-year agreement, it would be 27%, etc. Moreover, the overall non-interest costs of the credit must not exceed 45% of the total amount of credit (previously 100%). However, for facilities to be repaid in less than 30 days, the cap will amount to 5% of the total amount of the credit.
If a particular contract provides for higher costs, the consumer will only owe the costs calculated in accordance with the above considerations. There are also specific rules of calculating the cap in case a borrower grants two or more facilities within 120 days. The new measures are projected to be temporary as they will be in force for 365 days counted from the 8 March 2019.
Changes to the termination of and withdrawal from travel arrangements
The Anti-Crisis Shield legislation also amended the rules for travellers to withdraw from package travel contracts and for tour operators to terminate them, provided that such withdrawal or termination is directly linked to the SARS-CoV-2 outbreak. The standard rules, according to which the client could only receive a refund of already incurred payments, have been replaced with more specific arrangements aimed at striking a balance between the parties' interests. According to the Anti-Crisis Shield legislation, withdrawals and terminations will become effective after a notice period of 180 days. The parties will also have the right not to withdraw from or terminate the agreement if the traveller receives a voucher for future travel arrangements (not later than one year from the scheduled date of the suspended event). The value of the voucher cannot be lower than the value of the suspended package.
Analogous rules will apply to the organizers of cultural, entertainment, sporting and recreation events, as well as to undertakings and farmers that provide hotel services.
Protection of sole traders from abusive clauses postponed
The entry into force of a reform which broadens the application of the Civil Code and the Consumer Rights Act provisions on abusive clauses to individuals who pursue business activity, which was initially scheduled for 1 June 2020, has been postponed until 1 January 2021.