Hungary: Court rules on first public interest action by the competition office

The case concerned the general terms and conditions used by Experiment Entertainment Ltd. and Weltimmo S.r.o.

These companies had previously been investigated and fined HUF 6.6 million (c. €22,000) by HCO in 2010 for operating misleading practices towards consumers in various property marketing websites (http://www.ingatlandepo.com; http://www.ingatlanbazar.com/ and http://www.ingatlanbazar.net/). These included:

• disregarding consumers’ complaints
• misleading consumers about the status of certain advertisements
• conducting aggressive commercial practices, and
• withholding important information

This decision is currently under judicial review.

HCO also identified other potentially unlawful commercial practices within the companies’ general terms and conditions that could not be addressed within its original investigation. It therefore filed a public interest action seeking a declaration that the terms and conditions were unfair and therefore invalid.

The Metropolitan Court ruled that the following provisions (but not the entire agreement) were unfair and invalid for all consumers who were subject to them:

• the provision stating that consumers could not terminate the agreement as long as they had not fulfilled the claims made against them (on the grounds that it infringed the requirement of good faith and honesty and freedom of contract)
• the provisions relating to unclear, confusing, excessive liquidated damages (again on the grounds of infringing the requirement of good faith and honesty);
• the provision allowing the companies to unilaterally interpret the “enforcement and invalidity clause” of the agreement (and, if any clause in the agreement was deemed unenforceable or invalid, to unilaterally determine the content of the new provision replacing it).

The companies were also ordered to publish an announcement about the invalidity of the provisions pursuant to the Court’s judgment.

The decision is neither final nor binding and is subject to an appeal. However, it is likely to be relied on in any claims to be launched by consumers against the companies concerned in the near future.

Laws

:

Act LVII of 1996 on the prohibition of unfair market practices and unfair competition
Act XLVII of 2008 on the prohibition of unfair commercial practices towards consumers
Act IV of 1959 on the Civil Code