The Hungarian Competition Authority ("HCA") recently issued a communication on methods of setting fines in consumer protection cases. To ensure compliance, one company consulted an independent expert, whose opinion was taken into consideration in establishing the company's commercial practices.  The HCA highlighted that this fact would be acknowledged as a mitigating factor, thus triggering lower fines.

As emphasized by Levente Antal Szabó, Managing Partner at law firm KLART Szabó, "Previous case-law did not take into consideration companies' efforts to obtain an expert opinion from the Self-Regulation Association of Advertisers or a competition lawyer as a mitigating factor. However, practice has changed recently, so that the HCA has changed its approach." However, he adds that "The mere existence of a compliance programme is not enough. Rather, specific and substantial efforts to comply can be regarded as the mitigating factor in each case".

The HCA has had legal authority to publish "communications" since February 2001. The key role of these communications is to increase predictability and legal certainty by stating the basis of HCA case-law and by setting guidelines for the future based on a systematic overview of recent practical cases. The Constitutional Court also recognizes these communications, pointing out that they provide a good basis for market players, clarifying the criteria applied during HCA decision-making.

Communications are legally binding on the HCA, with deviations allowed only in exceptional cases, together with adequate justification.  Since 2001 the HCA has published several communications, although communications on fines trigger the greatest interest.

The first communication on fines levied in consumer protection cases was published by the HCA in October 2007. This detailed the measures and measurements applied in imposing fines, for instance: the cost of infringing information or proportional income generated on the relevant market by an infringement can be a starting point when assessing a fine.  Once the basic amount has been set, mitigating and aggravating factors are assessed, then the HCA analyzes whether the deterrent effect of the fine is sufficient. Finally, the HCA checks that the fine does not exceed the legal maximum.

Eight years later, the HCA issued a second communication on penalties. The aim was to encourage companies to make further efforts in order to comply with consumer protection laws.

Based on the most recent communication, the method of calculating the basic amount has slightly changed. The communication also explains mitigating and aggravating factors in more detail. Clearly, though, the key change is that, from now on, when calculating the applicable fine, the HCA will also take into account companies' efforts to achieve compliance.

According to the communication, efforts can be regarded as substantial if the advertiser under investigation can show that an independent person or entity (such as a lawyer or law firm), was hired to provide an expert opinion about the commercial practice to be established or introduced, and the expert opinion is obviously not contradictory to applicable laws and HCA practice.

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