On 15 December 2018, an amendment to the Polish Act of 16 February 2007 on Competition and Consumer Protection (ACCP) entered into force with a view to enhancing consumer protection. It confers on the President of the Polish Office of Competition and Consumer Protection the power to impose sanctions on natural persons who, in their capacity as managers and in the course of their service, intentionally allow the undertaking, whether by act or omission, to harm the collective interest of consumers or to use unfair terms in consumer contracts. A fine to be imposed on a manager shall not exceed PLN 2 million (ca. EUR 460 000), except in the case of undertakings which are subject to financial market supervision, where the fine could reach as high as PLN 5 million (ca. EUR 1.2 million). It is, however, worth noting that a fine may be levied on a manager only by a decision imposing a sanction on the undertaking they are in charge of for the abovementioned infringements of consumer protection laws.
The ACCP defines a manager as a person who manages an undertaking, including but not limited to executives and members of the governing bodies of an undertaking. Thus, in particular management board members of companies could potentially bear personal financial liability for breach of consumer protection laws by the undertaking. What is more, a person who is no longer a manager but served as one at the time when the infringement was committed could face sanctions.
When calculating the amount of the fine to be imposed on a manager, the authority will have to consider the specific circumstances of the case, such as the extent of the manager’s contribution to the actual infringement by the undertaking, the income obtained by the manager from acting in his capacity as such, the duration of the infringement, and its negative effects on the market and for the consumers. The competition watchdog should also take account of the mitigating and aggravating circumstances. It should thus weigh up the manager’s contribution to the cessation of the infringement prior to or immediately after institution of the proceedings, and steps taken to voluntarily remedy the negative market effects caused by the infringement. Considerable benefits derived by the manager in connection to the infringement or recidivism may, in turn, represent aggravating circumstances.
The recent amendment to the ACCP reflects the current stringent policy of the Polish competition watchdog toward undertakings infringing consumer rights. The reasoning behind the newly introduced changes is self-evident: no sanction ordered against an undertaking would yield comparably effective results in terms of prevention as a fine imposed on an individual responsible for running the undertaking. Incidentally, the idea of fining managers is not new to Polish competition law. The ACCP already provides for attribution of liability and imposition of fines on managers who, acting in their capacity as such, intentionally allow their undertaking to conclude agreements which have as their object or effect the prevention, restriction or distortion of competition. However, although this provision has already been in place for a few years, it has not been applied by the competition authority even once. The probable reason for this is that very few anticompetitive agreements have been disclosed since its introduction. Yet, given the large number of consumer protection cases investigated by the authority, an increase in the number of fines imposed on managers for such infringements seems to be in the cards.
It remains to be seen how the President of the Office of Competition and Consumer Protection construes the premises of the new provisions. Presumably, the most contentious issue will be the liability for failure to act where the undertaking is in breach of consumer protection laws. It is feared that the authority might come up with an interpretation that would be tantamount to the imposition of an obligation on managers to prevent infringements, despite the fact that the provision in question might as well be understood as imposing sanctions only for deliberate omissions perpetrated in full knowledge of the unlawful conduct.
The new provisions constitute a serious peril for managers, who are now at risk of personal financial liability for infringements committed by the undertakings in their charge. They will therefore be well advised to develop and maintain effective compliance policies and procedures for handling irregularities detected within the company. This could prevent infringements or contribute to prompt reversal of the harm incurred by the consumers, which might be seen by the competition authority as mitigating circumstances and justify a reduction of the amount of the fine.