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Protecting the Consumer or the Business? - International Law Office

International Law Office

Company & Commercial - Czech Republic

Protecting the Consumer or the Business?

October 20 2008


The field of consumer protection is a crucial area of law because it determines the fundamental boundaries of the consumer-business economic relationship. The legislature has recently stepped into this field and apparently changed the overall balance in favour of the business.

On February 11 2008 an amendment to the Act on the Protection of Consumers (634/1992 Coll), which implements the EU Unfair Commercial Practices Directive (2005/29/EC), came into force.

The amendment repealed the prior prohibition on misleading consumers. Instead, it has created the concept of ‘unfair commercial practice’. If a business’s conduct is in conflict with the requirements of professional diligence and is capable of materially distorting the decision making of consumers, it is deemed unfair commercial practice. Such conduct is prohibited.

The act further defines ‘misleading’ and ‘aggressive' practices, both generally and in a schedule to the act through a non-exhaustive list. Such practices are by nature defined as 'unfair practices' and therefore forbidden.

One interesting misleading act is a business's failure to comply with an ethical code to which it claims to be subject. Previously, consumers could do little in cases of non-compliance.

On the one hand, it may appear that the amended act provides increased protection for the consumer. This is particularly due to the facts that the definitions of ‘forbidden conduct’ are more exhaustive and the act contains a new list of specific business conducts that will always be considered unfair.

On the other hand, the implementation of the directive is imperfect and even misleading. The definition of ‘unfair commercial practice’ does not expressly include conduct contrary to good morals (as was the case previously), but merely conduct in conflict with the requirements of professional diligence. Earlier decisions will therefore lack continuity, as conduct in conflict with good morals is a broader concept than conduct in conflict with professional diligence. Therefore, businesses appear to have a freer hand. Yet the directive, as a superior law to the Czech act, clearly states that professional diligence equals “honest market practices” or “good faith”. Resolving this failing, which may make cancelling contracts that conflict with good morals more difficult, may take some time.

Unfortunately, the amendment has not introduced the possibility of individual consumers initiating court actions. The individual consumer must rely on the relevant state authority (usually the Czech Commercial Inspection) or a consumer association to enforce its rights.

For further information on this topic please contact Lukáš Lorenc at Čermák Hořejš Matejka a spol by telephone (+420 296 167 111) or by fax (+420 224 946 724) or by email (llorenc@apk.cz).


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