Omnibus Directive Strengthens Consumer Protection Rights in Hungary

The Hungarian Competition Authority has already started bringing the new rules on price display, sale prices, reviews and endorsements to the attention of market players and consumers. 

The most important changes concern the following Hungarian regulations:

1. Act XLVII of 2008 on the Prohibition of Unfair Business-To-Consumer Commercial Practices (“Unfair Commercial Practices Act”);
2. Joint Ministerial Decree of Minister for National Development and Economy and Minister for Social Affairs and Employment 4/2009 (I. 30.) on Laying Down Detailed Rules for the Indication of the Selling Price and Unit Price of Products and the Fees for Services (“Price Decree”);
3. Act CLV of 1997 on Consumer Protection (“Consumer Protection Act”)
4. Government Decree 45/2014 (II. 26.) on Detailed Rules for Contracts Between Consumers and Businesses (“B2C Government Decree”).

1. The Unfair Commercial Practices Act:

Under the new rules, consumers must be informed on the criteria used to determine how the products are ranked when using online marketplaces and comparison websites that allow consumers to search and compare products offered by different traders. The information must be drafted in plain language and made publicly available on the respective website.

Further, the existing list of commercial practices that are viewed as prima facie unfair will be extended to include the following:

1. providing search results based on a consumer's online search query, without explicitly disclosing any paid advertising or payment that were used to rank certain products specifically higher in search results: all online platforms will be required to clearly distinguish between search results that are paid for by traders and “natural” search results provided by the search engine (i.e., those not paid for);
2. the resale of tickets to events to consumers where the trader has purchased the tickets by automated means to circumvent restrictions on the number of tickets that can be purchased by a single person or any other rules applicable to ticket purchases;
3. claiming that a product review was submitted by a consumer(s) who have used or purchased the product without taking reasonable and proportionate steps to verify the authenticity of the review(s);
4. submitting false consumer reviews, recommendations, or commissioning another legal or natural person to do so, to promote products, and publishing false consumer reviews and/or recommendations on social media.

2. The Price Decree:

The Price Decree implements Article 2(1) of the Omnibus Directive and sets out the rules to be followed in regard to a price reduction announcement. Under the new rules, 

1. a trader must indicate the “previous” price before the price reduction which means the lowest price applied by the trader during a period of time not shorter than 30 days prior to the application of the price reduction; 
2. where the product has been in circulation for less than 30 days, the “previous” price means the lowest price applied by the undertaking during a period which may not be less than 15 days preceding the application of the price reduction;
3. when the price reduction is progressively increased, the “previous” price is the price without the price reduction before the first application of the price reduction. 

These rules do not apply to perishable products or products which retain their quality for a short period.

3. The Consumer Protection Act:

The modifications concern two areas: 

1. the Consumer Protection Act will specify the aspects to be considered when determining the sanctions for infringement of consumer protection measures; and
2. the Consumer Protection Act introduces new limits in regard to “large-scale” infringements that involve at least two Member States other than the Member State where the infringement occurred. 

4. The B2C Government Decree:

The B2C Government Decree grants new consumer rights in regard to “free” digital services and increases transparency in online marketplaces. Consumers must be informed when buying digital services whether the third party offering the products is a trader or not and whether the transaction is to be regarded as a B2C contract with consumer rights. Further, consumers will have the same rights to withdraw from or cancel a contract within 14 days after the contract was made, this includes “free” services where consumers provide personal data, but no financial payment is made. 

Summary

In terms of the application of these new rules there are a number of legal and practical questions that are yet to be answered. For example, whether the changes to the Price Decree will also apply to services offered on special prices or to services where the prices cannot be determined in advance. Nonetheless, the already strong consumer rights will be extended from 28 May 2022 and  market players will be required to ensure that their commercial practices are compliant with the new rules. 

The act modifying the Unfair Commercial Practices Act and the Consumer Protection Act is available in Hungarian here, the ministerial decree modifying Price Decree is available in Hungarian here and the government decree modifying the B2C Government Decree is available in Hungarian here.

For more information, please contact Dániel Arányi, Gábor Kutai or Rebeka Szopkó and visit our Competition & EU homepage.