All power to the shopper
"Both the Law on Alcohol Advertising and the Law amending the Act on Unfair Competition contain provisions which appear to contradict the acquis concerning the free movement of goods." - 2002 Regular Report on Poland's Progress Towards Accession.
What does the free movement of goods have to do with protecting the consumer? Everything. By restricting the movement of goods, consumers are precluded from making an informed decision. According to the European Parliament's Directive 1999/44/EC, each member country is to ensure that the "free movement of goods, persons, services and capital is guaranteed." The directive goes on to declare that "the artificial reconstruction of frontiers and the compartmentalisation of markets should be prevented." It appears that we still have some way to go in harmonising our consumer protection laws with those of the EU. We still have time, but as Poland did not seek any transition period, our consumer laws are supposed to comply with EU law by the date of accession.
Take the recently amended Act on Unfair Competition as an example. This law, identified by the EU Commission as inhibiting the free movement of goods, severely restricts a retailer's right to sell merchandise at a discount to its suggested retail price. The act makes it illegal for retailers in a shopping centre larger than 400 square metres to sell merchandise at or below cost, unless such a sale is either restricted to a "seasonal" sale lasting no longer than a month (twice per year), applies only to "expired" goods, or is the result of the store going out of business. Simply put, a retailer who decides to have a "Back to School," "After Christmas," and "Spring White Sale" in the same year may be committing a crime. Moreover, any merchant, this time both large and small, is now prohibited from offering gift certificates that can only be redeemed by a consumer in that merchant's store. In other words, a retailer may only issue "universal" gift certificates redeemable by any competitor. To make matters worse, it is now illegal to sell gift certificates at a discount to their face value. Excuse me?
Penalties for violating these restrictions range from the imposition of a fine on the retailer to up to eight years imprisonment, depending on the particular severity of the violation. Even more bad news for consumers and employees. An employee is now subject to personal income tax on any gift certificate(s) received as a gift from his or her employer in excess of zł. 380 in value, in addition to social security taxes if purchased by the company's own private funds. My wife really hates this law.
However, the fact that my wife hates this law does not in and of itself make it a bad law, but I wouldn't argue with her. So, why does the EU report come to the same conclusion as my wife? Simple, albeit for different reasons. First, an EU member country may not discriminate against the citizens of another member, including corporate citizens. Despite its stated purpose to merely "level the playing field" between small and large retailers, this law has had a greater negative impact on foreign retailers operating in the country compared to Polish retailers. The disparate treatment of foreign nationals, whether natural or legal persons, is illegal under EU law. And as my wife points out, the many restrictions placed on the sale of goods and the use of gift certificates unreasonably impair, in lawyer-speak, her ability to shop till she drops, thereby restricting the free movement of goods and services.
The Law on Alcohol Advertising, adopted just over a year ago, is also cited in the report as possibly violating the free movement of goods. Despite the authors' stated intent to shield children from alcohol advertising, the prohibition on most forms of alcohol advertising could be adjudged to impede the free movement of goods. Whereas consumers are familiar with Żywiec, Lech and Hevelius, the same may not be true for imported beers, such as Warsteiner, Budweiser Budvar (the Czech one) and Killian's. The EU could very well determine that Poland must revise this laws too, if it finds that the ban on alcohol advertising adversely affects the free movement of goods, in this case beer produced in other EU member states. My wife doesn't care about this law.
The Law on Alcohol Advertising and the Law amending the Act on Unfair Competition are just two brief examples of the challenges Poland faces in harmonising its consumer protection laws with those of the EU. One area that the country does need to direct more resources to is educating consumers and the business community on the coming changes. Recognising this need, the commission's report declares, "The most important challenge at this time is for Poland to ensure that the general public and business operators have a sufficient understanding of the legislation and of the rights and obligations which it generates." Currently, the Polish government is in the process of doing just this.
In 2002, the government drafted two inward looking analyses of the state of consumer protection in Poland: "The Status of Consumer Rights in Poland" and the "Government Programme on Consumer Protection Policy for 2002-2003." The latter outlines several projects to be taken by the government to raise the level of consumer awareness prior to accession. The former identifies areas of law that still need to be amended to protect consumer rights. More on the implementation of these two reports in coming Legal Eye columns.
Poland has, by far and large, made a lot of progress. By the end of 2002 the Trade Inspectorate, a consumer products watchdog agency, had grown to more than 3,000 staff, with regional offices in each of the 16 voivodships and sub-branches located in the 34 largest cities. Moreover, 35 regional conciliation courts have been established for the sole purpose of adjudicating consumer complaints outside the normal judicial system. Consumer advocates, currently numbering more than 360, have also been appointed at the powiat administrative level throughout the country. These advocates act as consumer ombudsmen, investigating consumer complaints and serving as intermediaries between consumers and retailers.
As for my wife, I am relieved to report that więty Mikołaj was very good to her this year and hopefully her compunction to buy everything which falls within her laser-like gaze will be satisfied for at least another year, gift certificates or not!
Paul Fogo is a senior attorney at the Warsaw office of Miller, Canfield, Paddock and Stone
What does the free movement of goods have to do with protecting the consumer? Everything. By restricting the movement of goods, consumers are precluded from making an informed decision. According to the European Parliament's Directive 1999/44/EC, each member country is to ensure that the "free movement of goods, persons, services and capital is guaranteed." The directive goes on to declare that "the artificial reconstruction of frontiers and the compartmentalisation of markets should be prevented." It appears that we still have some way to go in harmonising our consumer protection laws with those of the EU. We still have time, but as Poland did not seek any transition period, our consumer laws are supposed to comply with EU law by the date of accession.
Take the recently amended Act on Unfair Competition as an example. This law, identified by the EU Commission as inhibiting the free movement of goods, severely restricts a retailer's right to sell merchandise at a discount to its suggested retail price. The act makes it illegal for retailers in a shopping centre larger than 400 square metres to sell merchandise at or below cost, unless such a sale is either restricted to a "seasonal" sale lasting no longer than a month (twice per year), applies only to "expired" goods, or is the result of the store going out of business. Simply put, a retailer who decides to have a "Back to School," "After Christmas," and "Spring White Sale" in the same year may be committing a crime. Moreover, any merchant, this time both large and small, is now prohibited from offering gift certificates that can only be redeemed by a consumer in that merchant's store. In other words, a retailer may only issue "universal" gift certificates redeemable by any competitor. To make matters worse, it is now illegal to sell gift certificates at a discount to their face value. Excuse me?
Penalties for violating these restrictions range from the imposition of a fine on the retailer to up to eight years imprisonment, depending on the particular severity of the violation. Even more bad news for consumers and employees. An employee is now subject to personal income tax on any gift certificate(s) received as a gift from his or her employer in excess of zł. 380 in value, in addition to social security taxes if purchased by the company's own private funds. My wife really hates this law.
However, the fact that my wife hates this law does not in and of itself make it a bad law, but I wouldn't argue with her. So, why does the EU report come to the same conclusion as my wife? Simple, albeit for different reasons. First, an EU member country may not discriminate against the citizens of another member, including corporate citizens. Despite its stated purpose to merely "level the playing field" between small and large retailers, this law has had a greater negative impact on foreign retailers operating in the country compared to Polish retailers. The disparate treatment of foreign nationals, whether natural or legal persons, is illegal under EU law. And as my wife points out, the many restrictions placed on the sale of goods and the use of gift certificates unreasonably impair, in lawyer-speak, her ability to shop till she drops, thereby restricting the free movement of goods and services.
The Law on Alcohol Advertising, adopted just over a year ago, is also cited in the report as possibly violating the free movement of goods. Despite the authors' stated intent to shield children from alcohol advertising, the prohibition on most forms of alcohol advertising could be adjudged to impede the free movement of goods. Whereas consumers are familiar with Żywiec, Lech and Hevelius, the same may not be true for imported beers, such as Warsteiner, Budweiser Budvar (the Czech one) and Killian's. The EU could very well determine that Poland must revise this laws too, if it finds that the ban on alcohol advertising adversely affects the free movement of goods, in this case beer produced in other EU member states. My wife doesn't care about this law.
The Law on Alcohol Advertising and the Law amending the Act on Unfair Competition are just two brief examples of the challenges Poland faces in harmonising its consumer protection laws with those of the EU. One area that the country does need to direct more resources to is educating consumers and the business community on the coming changes. Recognising this need, the commission's report declares, "The most important challenge at this time is for Poland to ensure that the general public and business operators have a sufficient understanding of the legislation and of the rights and obligations which it generates." Currently, the Polish government is in the process of doing just this.
In 2002, the government drafted two inward looking analyses of the state of consumer protection in Poland: "The Status of Consumer Rights in Poland" and the "Government Programme on Consumer Protection Policy for 2002-2003." The latter outlines several projects to be taken by the government to raise the level of consumer awareness prior to accession. The former identifies areas of law that still need to be amended to protect consumer rights. More on the implementation of these two reports in coming Legal Eye columns.
Poland has, by far and large, made a lot of progress. By the end of 2002 the Trade Inspectorate, a consumer products watchdog agency, had grown to more than 3,000 staff, with regional offices in each of the 16 voivodships and sub-branches located in the 34 largest cities. Moreover, 35 regional conciliation courts have been established for the sole purpose of adjudicating consumer complaints outside the normal judicial system. Consumer advocates, currently numbering more than 360, have also been appointed at the powiat administrative level throughout the country. These advocates act as consumer ombudsmen, investigating consumer complaints and serving as intermediaries between consumers and retailers.
As for my wife, I am relieved to report that więty Mikołaj was very good to her this year and hopefully her compunction to buy everything which falls within her laser-like gaze will be satisfied for at least another year, gift certificates or not!
Paul Fogo is a senior attorney at the Warsaw office of Miller, Canfield, Paddock and Stone
