Unfair Market Practices - When Do They Happen?

Service

A protected good is free competition. It is a form of competition for economic benefits. Activities are aimed at being better than rivals in the same industry and attracting as many customers as possible. This is regulated by the Act on competition and consumer protection. The relevant market is the market of goods suitable for their intended use, properties and in a specific area, consumer preferences and conditions of competition. But sometimes there is unfair competition? When do unfair market practices take place?

Competition-restricting agreements

Competition-restricting agreements are agreements concluded between entrepreneurs.

The agreement may take the form of:

  • pricing (e.g. same low prices)

  • controlling production (e.g. limiting production)

  • division of the market (e.g. one entrepreneur takes over the market of the Dolnośląskie Voivodeship another Greater Poland)

  • application of non-uniform terms and conditions of contracts with third parties

  • the task of performing the service before concluding the contract

  • limiting or eliminating entrepreneurs from the market

  • bid rigging.

Competition-restricting agreements are prohibited under the Competition and Consumer Protection Act. Violation of the regulations initiates antimonopoly proceedings.

Competition-restricting agreements, prohibited provisions of standard contracts or practices violating collective consumer interests are prohibited by law.

Attention!

Competition-restricting agreements will not be the actions of competitors when:

  • their market share is 5% each, and if they are not competitors then 10%

  • contribute to technological / economic progress

  • provide benefits to the buyer

  • do not impose restrictions on other entrepreneurs.

Agreements are wholly or partially invalid. Proving the actual state of affairs lies within the competence of the entrepreneur.

Abuse of a dominant position

A dominant position means such a status of an entrepreneur on the market that he has a position not threatened by competition from other entities. This situation prevents the functioning of new competition on the market.

If the entrepreneur's share in the relevant market exceeds 40%, it can be said that he has a dominant position. It is not forbidden to possess such a position and to abuse it.

It is forbidden under Polish law to abuse a dominant position by one or more entrepreneurs.

Abuse of a dominant position can take the form of:

  • direct price imposition (e.g. abnormally low price - the so-called dumping price)

  • any imposition of distant payment terms

  • product limitation

  • application of non-uniform terms and conditions of contracts with third parties

  • the task of performing the service before concluding the contract

  • counteracting the shaping of conditions for the development of competition

  • profiting from unjustified conditions

  • market division.

Important!

Seeing the very low price of the product, keep in mind that this is a dumping price, often not even covering the cost of production. Setting such a price in export is only aimed at attracting the customer and mastering the market. Such practice is a manifestation of unfair competition.

Misleading information as unfair market practices

If the trader causes the potential consumer to make a purchasing decision which he would not normally have made, it can be considered a misleading act.

The following may be misleading:

  • providing false information

  • false information about the product itself (its existence, availability, type, features)

  • non-compliance with the code of good practice

  • evasion of obligations imposed by statutes.

Practices violating collective consumer interests

Consumer contracts are obligation contracts where the entrepreneur is on one side and the consumer on the other. A consumer is a person who purchases a given item from an entrepreneur for purposes not related to business activity.

Practices detrimental to the collective interests of consumers are prohibited. The unlawful actions of the entrepreneur include, among others, harming the interests of consumers. Protection of collective consumer interests does not exclude the possibility of protection resulting from other acts, e.g. those relating to counteracting unfair market practices or combating unfair competition.

Use of contract templates entered in the register of prohibited contracts

Inaccuracies in the contract are prohibited contract terms. Contractual templates often contain illegal clauses. Consumers reading the contract do not have any real influence on its provisions, but only sign the content or not - which is associated with the failure to conclude the contract. They are often used by banks, developers, energy or gas supplies. In such a contract, it happens that clauses unfavorable to the consumer are imposed on the consumer. It happens that entrepreneurs specify in the contract the exclusion of liability for improper performance of the obligation.

Important!

The Civil Code stipulates that all provisions not individually agreed with the consumer shall not bind him if they infringe his interests and are contrary to morality.

You can notify the President of UOKiK about your suspicions that entrepreneurs use prohibited clauses, the so-called abusive.

The Office of Competition and Consumer Protection conducts regular checks of contract templates. If the price or remuneration has been formulated unambiguously, the provisions of the contract will not be considered illegal.

Prohibited clauses include those that:

  • limit or exclude the liability of the entrepreneur

  • they give the entrepreneur control over the content of the provisions and the performance of the contract

  • enable unfavorable shaping of the duration of the contract

  • otherwise violate the contractual balance.

Attention!

Clauses that are not permitted in the content of the contract or in the contract template do not bind the consumer by operation of law as to the provision deemed illegal. This means that the contract is concluded within the scope of other provisions, apart from the prohibited ones.

Failure to inform consumers

The basic obligations of the entrepreneur include clearly informing their consumers. The subject and content of the contract must be known to the consumer prior to its conclusion. The general obligations of entrepreneurs include those related to the information obligation - at the latest when the consumer expresses his will to be bound by the contract. The entrepreneur is obliged to indicate:

  • the main features of the service, the subject of the service and the way of communicating with it

  • your identification data

  • total price

  • method of performance and complaint

  • responsibility for the quality of the service

  • the content of after-sales services and guarantees

  • the duration of the contract and the option to extend it

  • functionality of digital content

  • digital content interoperability.

The consumer must always be well informed about the price of the product. In addition, the entrepreneur's obligation to inform and price is to obtain the consumer's consent for all additional payments beyond the originally agreed one. This is especially true for an additional insurance or transportation fee or other "hidden costs". It is also forbidden to charge higher fees for telephone contact with the entrepreneur.

In the case of off-premises contracts, please inform about:

  • your data

  • contract elements.

A document confirming the contract must be issued.

The mechanism of free competition is a protected good, so all unfair market practices are punished. The Act of 23 August 2007 on counteracting unfair market practices lists the scope of liability for infringements.

The chapter on criminal provisions lists the fines. The Act also refers to the Code of Conduct in misdemeanor cases.

In addition, any consumer who considers that his interest has been violated may request:

  • abandoning such practices

  • remove the effects

  • make a declaration of appropriate content

  • compensation for the damage caused

  • order an appropriate amount of money.

The above claims may also be submitted by the Ombudsman, the Financial Ombudsman, a national organization dealing with the protection of consumer interests, a poviat (municipal) consumer ombudsman.