The impact of Directive 2005/29/EC on Polish law on combating unfair competition

Introduction

“Polish law against unfair competition has been influenced by international law and, in recent years, primarily by EU law. The impact of EU law is so significant that it requires a new and comprehensive look at Polish law on combatting unfair competition, particularly since it may be expected that in the near future the regulations on unfair competition in Member States will undergo further harmonisation. With this being the case, the Polish legislator is likely to face the not very easy task of proper implementation of EU legislative acts in the national legal system. As the experience of recent years shows, all to date implementations of various pieces of legislation, including in particular Directive 2005/29/EC on unfair commercial practices,1 have posed a major challenge. Implementations in Poland were carried out hastily, without the necessary consultation with legal scholars (and the academic community), and lacked a holistic view of the entire system of protection against unfair competition. This publication is an attempt to present the major problems that continue to exist in Polish law against unfair competition.

The considerations begin with a presentation (in chapter 1) of the sources of law that have had a fundamental impact on the issues discussed in the book and that provide a foundation for further discussion. The catalogue of the sources of law against unfair competition presented in this work is not exhaustive. The purpose of the analysis of the legislative acts cited was to place the discussed issues in a specific legal context to draw readers’ attention to the fact that despite various actions taken at the international and EU level, the law on combatting unfair competition in EU Member States, although basically built on the same legal foundations, has not yet been fully harmonised and differs from one Member State to another.

The basic piece of international law is the Paris Convention for the Protection of Industrial Property of 20 March 1883,2 which has had a significant impact on the shape of the law against unfair competition in the EU Member States today. Article 1(2) of the Convention places combatting unfair competition among the objects of industrial property law.

Another international convention that, indirectly, relates to the law against unfair competition is the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).3 Although TRIPS does not mention combatting unfair competition among its objectives, it does refer to the Paris Convention, and its provisions on geographical indications and undisclosed information influence the solutions adopted in EU Member States.

Among the international material worthy of inclusion in the discussion are the model provisions on protection against unfair competition developed by the World Intellectual Property Organisation (WIPO).4 While their adoption is not mandatory, they may provide a point of reference for developing countries wishing to establish an effective system aimed at the protection of fair competition.

Other instruments of international law cited in the literature have been omitted from consideration5 as a source of law against unfair competition. This is because their scope of application is limited only to certain specific, albeit discrete, issues (designations, trademarks, appellations of origin, or advertising) and not to issues of a fundamental nature.

Among the EU acts relating to the law against unfair competition, Directive 2005/29/EC plays a key role for any deliberations, as it introduced a new approach to the way in which the law against unfair competition is to be transposed. Unlike previous acts that were based on the adoption of a minimum standard of protection,6 the Directive adopted a maximum standard and left Member States with little leeway in its implementation. Moreover, since a regulation of unfair competition more restrictive than that anticipated in Directive 2005/29/EC is not allowed, Member States had to carry out an overall revision of their respective legislation in that respect. This, in turn, has led to multiple doubts of interpretation also with regard to the existing national regulations intended to protect the interests of traders.

Doubts arise primarily because Directive 2005/29/EC does not harmonise the entirety of the law against unfair competition but only addresses unfair business-to-consumer (B2C) commercial practices. Harmonisation has thus proved to be only partial and has created confusion as to the interplay between national rules on business-to-business (B2B) relations and harmonising (at least partially) rules on B2C relations. The difficulty of these relationships stems from the model adopted in EU law. Commercial practices are divided according to the criterion of the trader’s relationship with other parties, i.e. with the trader (B2B) and with the consumer (B2C). However, the division does not take into account the person to whom these practices cause or are likely to cause harm. A practice addressed to a consumer may also harm the trader, while a practice addressed to the trader may harm the consumer,7 and this means that the effects that commercial practices may produce, regardless of whether they are applied in a B2B or B2C relationship, will affect the interests of traders and of consumers. This unsatisfactory legal status is, to some extent, due to the failure of a successful completion of the 2001 EU Regulation on Sales Promotion.8 The aim of the Regulation was to establish common rules for sales promotion and commercial communication rules to ensure the proper functioning of the internal market and a high level of consumer protection. The work on Directive 2005/29/EC and on the Regulation was carried out in parallel and formed a single, interlinked harmonisation project. The adoption of only one of the acts means that not only has harmonisation not been carried out in its entirety to the extent envisaged, but, what is more, the focus of the measures taken has been on the protection of consumer interests. A closer look at the solutions adopted in the proposed Regulation and its main objectives is important for several reasons. In the solutions proposed at the EU level, we also note the spirit of the draft Regulation. Therefore, we may expect that the EU legislator will, when making new proposals, refer to previous solutions that have not even been adopted but that have nevertheless already been discussed and thought through. The proposals adopted in the draft Regulation should also be taken into account when considering further attempts to harmonise sales promotion regulations. They may certainly provide a point of reference for legislators in individual Member States seeking to modernise national regulations on sales promotions.

In Poland, there is an ongoing discussion on the future shape of Polish law against unfair competition. The need for discussion arose as a result of the implementation of Directive 2005/29/EC into Polish law against unfair competition in the form of a separate Act of 23 July 2007 on Counteracting Unfair Market Practices.9 This Act introduced new solutions to the law on combatting unfair competition, which were not coherent with the then-existing legislation (the Act on Combatting Unfair Competition). As a consequence, currently there exist two key legislative acts in Poland, both governing the law against unfair competition, but which are not properly interrelated.

One is the Act on Combatting Unfair Competition. At the time of its enactment in 1993, it was a state-of-the-art act, and for many subsequent years, it effectively protected honest traders against acts of unfair competition, as shown in the numerous judgements delivered by common courts in matters concerning various acts of unfair competition. Depending on the factual situation in Poland, some of the provisions have been applied extremely frequently, attracting the interest of courts and doctrine representatives. Others, on the other hand, have not received much interest and have been seldom referred to in adjudications and have triggered little academic attention or interpretation.

The other is the Act of 23 July 2007 on Counteracting Unfair Market Practices. Its adoption stirred great interest among academics but encountered severe criticism. Needless to say, too, that this Act has very little practical significance. Consumers, as actively entitled persons, generally do not assert any claims under its provisions, and there have only been a few court decisions known to have been delivered.

In order to propose possible solutions to the current situation of the Polish law against unfair competition, it was necessary to examine, in Chapters II and III, the scope and objectives of both legislative acts. In the course of the research, many issues were discussed extensively. Studying them in depth was necessary because some pertained to key questions, which, being controversial both in the literature and in the judicial decisions, had to be addressed and solved. The main problem was finding an answer to the questions of whether the implementation of Directive 2005/29/EC in a new, separate act was a proper and justified implementation, or whether it would have been better to transpose the Directive into the Act on Combatting Unfair Competition already in force, taking into account the Polish tradition of protection against unfair competition. These doubts are also outlined in the Polish literature. On the one hand, it has been argued that, in connection with the implementation of the Directive, the two above-mentioned Acts should be repealed and replaced with a single new Act that would comprehensively cover the issue of honesty in business dealings.10 On the other hand, the idea of repealing the Act on Combatting Unfair Competition and introducing protection of traders’ interests against unfair competition into the Act on Counteracting Unfair Market Practices was criticised. It was assessed that such actions would result in the rejection of the case law and doctrine developed on the basis of the Act on Combatting Unfair Competition and would disrupt the functioning of the market economy in Poland.11

In order to demonstrate that separating the scope of the two Acts may be a difficult task and that certain solutions available under Polish law may be in conflict with EU law, in Chapter IV the prohibition of bonus sales as regulated in Article 17a of the Act on Combatting Unfair Competition is analysed in detail.12 That prohibition was added to the Act on 5 July 2002. Pursuant to this provision, it is an act of unfair competition to ‘sell goods or services to consumers if their sale is combined with the granting to all or some of the buyers of a free bonus in the form of goods or services different from those constituting the object of sale’. Article 17a(2) of the Act on Combatting Unfair Competition provides for certain exceptions to this prohibition. And so, a bonus sale will not amount to an act of unfair competition if it is a good or service: ‘(1) of small value or a sample of goods; (2) a winning in a promotional lottery organised under gambling regulations or competitions whose outcome does not depend on chance.” This prohibition was introduced in order to protect small and medium-sized traders who, as economically weaker market participants, were unable to compete with larger ones by granting free bonuses in sales contracts with consumers. In principle, the prohibition should therefore be limited to B2B relationships. However, as clearly reads from Article 17a of the Act on Combatting Unfair Competition, that prohibition applies to the sale of goods and services to consumers, a practice used in B2C relationships. In view of this interesting relationship between the purpose of the prohibition introduced and the relationships to which it actually applies, it was necessary to examine what role the introduced prohibition plays. After all, if it has no impact on the economic interests of consumers but concerns only and exclusively the interests of traders, it is outside the scope of Directive 2005/29/EC. If this is not the case, however, the prohibition must be looked at through the prism of that Directive. Alternatively, the consumers’ interest can be found in the assumption that the latter should make informed choices based on rational premises. On the other hand, the common commercial practice adopted by traders, which consists of adding various types of free bonuses in transactions with consumers, may have a significant impact on the decisions the consumers make. Consequently, considerations concerning the prohibition of bonus sales are relevant not only to the attempt to seek justification for maintaining or repealing Article 17a of the Act on Combatting Unfair Competition, but also to the entire Polish system of combatting unfair competition. For if it turns out that Article 17a, although enacted to protect the interests of entrepreneurs, at least indirectly applies to the protection of the interests of consumers, its interpretation should be considered in the light of the provisions of Directive 2005/29/EC. In this respect, the applicable provisions would have to be in line with the provisions of that Directive. It may therefore turn out that the prohibition of bonus sales, although originally intended to protect traders, is incompatible with Directive 2005/29/EC and, accordingly, will have to be amended or repealed.

It should be added that the conceptual scope of ‘bonus sales’ itself is also unclear. In case law and in the literature, there are other, comparable terms that are also used, such as a premium sale or a combined sale. In defining these terms, it was necessary to refer to the case law of the Court of Justice of the European Union.13

Thus, the most important judgements of the CJEU relating to this kind of commercial practice have been analysed in Chapter V. In a relatively large number of rulings, the Court considered the issue of the admissibility of bonus sales and combined sales, as well as the interpretation of the basic concepts (commercial practice, trader) and issues (prohibition of making provisions and the role of national courts) of Directive 2005/29/EC. The analysis of CJEU rulings made it possible to assess the compliance of the Polish prohibition of bonus sales with EU law, in particular with Directive 2005/29/EC.

The purpose of the conducted research was to analyse the problems that occur in the Polish law against unfair competition, which are partly a consequence of the impact of EU law. Finding a single solution for all Member States is a major challenge not only for the EU legislator but even more so for national legislators, who have to ‘adjust’ the adopted compromise solutions to their respective existing systems of combatting unfair competition, encapsulated by case law and doctrinal views. It should not be forgotten either that these systems have developed in countries with different levels of economic development and different economic experiences. The creation of a single, one-size-fits-all, harmonised system today is extremely difficult, as illustrated by the issues presented in the publication.