© Springer-Verlag Berlin Heidelberg 2015Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_27
Ádám Liber1 , Gusztáv Bacher2, Lilla Cs. Tóth3, Orsolya Hambalkó4, Anikó Keller2, Ágnes Komári5, Tamás Kostyánszki6 and Katalin Szamosi7
Bogsch & Partners, Budapest, Hungary
Partner at Szecskay Attorneys at Law, Budapest, Hungary
Managing Partner of Cs. Tóth Law Firm, Budapest, Hungary
Case Handler at the Hungarian Competition Office, Budapest, Hungary
PhD candidate at ELTE Law Faculty, Budapest, Hungary
Senior Compliance Associate at UniCredit Bank Austria AG, Vienna, Austria
Managing Partner of SBGK Law Office, Budapest, Hungary
Members of the Working Committee: Gusztáv Bacher; Lilla Cs. Tóth; Orsolya Hambalkó; Anikó Keller; Ágnes Komári; Tamás Kostyánszki; Katalin Szamosi.
27.1 Corporate Social Responsibility in Hungary
“CSR” refers to an undertakings’ commitment to conduct business in a way that has a positive impact on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere1; however, its notion has no clear and accepted definition.2
Based on local surveys,3 it can be generally stated that CSR has been present in the activities of Hungarian top-tier and multinational companies only in the past 10 years. In Hungary, CSR is treated as a communication tool and considered as part of the image communication; therefore, CSR programs are supervised by the PR/marketing departments. Surveys reflect that CSR is already an integral part of the strategy planning of leading firms; however, CSR activities are only rarely represented at the top management level of local companies.4 In contrast to multinationals that conduct CSR activities—that is more or less influenced by group level CSR commitments—small and mid-size undertakings in Hungary do very rarely conduct CSR activities.
Remarkably, only a very little (but growing) proportion of local consumers find the seller’s CSR activities as an important/a determining factor of their purchase decision,5 as it is the purchase price that is of utmost importance for the Hungarian average consumer.6
The types of local CSR programs range between voluntary work (Provident), employment of persons with disabilities (Telenor), child support (Raiffeisen Bank), equal opportunities (Magyar Telekom), selective waste collection (Electrolux), donation/sponsorship (Audi Hungaria), education programs (Kürt), shelter programs (McDonald’s), etc. CSR commitments may be reflected in drawing up codes of conduct, in developing policies and initiatives, as well is in implementing mechanisms for the supervision of such commitments.
The Hungarian Group believes that only those CSR policies that refer to a specific commitment of its publisher (advertiser) might give rise to legal concerns. For instance, if a CSR policy refers to the fact that its signatory does not use any child labor in connection with the production of goods it sells but, in fact, the producer of the goods does employ children, this may be qualified as a misleading unfair commercial practice for which the signatory would be liable. In contrast, general declarations and mission statements in CSR policies such as “we are committed to environmental sustainability” does not reflect any specific commitment; therefore, such statements are unlikely to trigger the trader’s liability.
We note in advance that there is no relevant practice available in the Hungarian jurisdiction regarding the prosecution/breach of CSR commitments; thus, in practice, CSR policies did not give rise to any specific legal concerns in Hungary, yet.
Legal concerns might arise in the context of sponsorship of certain undertakings and relating to certain products: the Hungarian Act on Business Advertising7 specifically prohibits8 sponsorship activities relating to tobacco products if it concerns events or activities involving or taking place in several Member States of the European Economic Area or otherwise having cross-border effects, events in connection with sporting and cultural events or events or activities relating to health care. Further, tobacco companies are also required to publish the amount of their spending on sponsorship during the current year on their website and in at least two national daily newspapers. Regarding the prosecution of the tobacco sponsorship ban, BAT Hungary has been fined with HUF 10 million (approximately EUR 30,000) by the National Consumer Protection Authority (NCPA) in 2009 for awarding the “BAT Publicum’s Prize” at the National Theatre of Pécs.9
In the context of media services, the Act CIV of 2010 on the freedom of the press and the fundamental rules on media content generally prohibits10 surreptitious advertising in the media content. This prohibition refers to any commercial communications the publication of which deceives the audience about the true nature of the communication. In relation to CSR programs, Act CLXXXV of 2010 on Media Services and Mass Media (Act on Media Services) provides11 that in media services, information concerning the corporate social responsibility of an undertaking shall not qualify as a surreptitious commercial communication, but such reports may only contain the name, logo and trademark of the undertaking and its product or service, if it is closely connected to its social responsibility. The slogan of the undertaking or any parts of its commercial communication may not appear in the report, and the information may not expressly encourage the purchase of the product or the use of the service offered by the undertaking.
27.2 Prevention and Sanctioning of Commercial Practices Breaching a CSR Policy
27.2.1 Relevant Legislation
In Hungary, there are no special sui generis laws in force that address specifically the breach of CSR policies. However, there are legislative acts that are more general in nature but applicable if an undertaking breaches its own self-imposed CSR policy, which may constitute a violation of the provisions of the Competition Act,12 the UCP Act13 (implementing the EU Unfair Commercial Practices Directive) or the Act on Business Advertising.
If the undertaking breaches its own self-imposed CSR policy, the provisions of the UCP Act14 would be applicable to such conduct, provided such breach could be considered as a commercial practice potentially affecting the transactional decision of any consumer in the territory of Hungary. Under the UCP Act, consumers are exclusively natural persons.
According to Article 5 of the UCP Act, codes of conduct shall not encourage unfair commercial practices.
Moreover, the Annex of the UCP Act (the so-called blacklist) also lists those conducts that are specifically ex lege unfair. According to the first and the second paragraphs of the blacklist, claiming to be a signatory to a code of conduct when the undertaking is in fact not as well as claiming that a code of conduct has an endorsement from a public administrative authority or other body vested with public administrative authority, which it does not have, are specifically unfair and therefore prohibited.
The Act on Business Advertising applies to any business advertising performed by persons in their capacities as advertisers, advertising service providers or publishers of advertisements, to sponsorship as well as to codes of conduct relating to them. The CSR breach would be considered as a misleading advertising—subject to the provisions of the Act on Business Advertising—if its addressees were exclusively undertakings (nonnatural persons) acting for purposes that do not relate to their respective independent professions and economic activities.15 Thus, the pertaining provisions of the Act on Business Advertising apply only to B2B relations.
Article 2 of the Competition Act lays down a general clause that prohibits unfair economic activities, which infringe or jeopardize the legitimate interests of competitors, trading parties or consumers or is contrary to the requirements of business fairness. Further, Article 8 of the Competition Act might be also applicable in relation to the breach of CSR commitments. This provision generally prohibits deceiving trading parties (business partners) in economic competition. Paragraph 2 sets out some particular cases of deception of trading parties, which are prohibited according to that Article.
Summarizing the above:
If a CSR breach is considered as a commercial practice (such as advertising) affecting any consumer (including any kind of business-to-consumer communications), the UCP Act would be applicable.
If the CSR breach is committed by advertising (e.g., misleading advertising), which does not concern any consumer (but trading parties/business partners), the provisions of the Act on Business Advertising would apply to such conduct.
In contrast, if the CSR breach could not be qualified as “advertising” but similarly deceives/unfairly influences trading parties (business partners), this conduct would be subject to the provisions of the Competition Act.
27.2.2 Enforceability of the Relevant Laws
220.127.116.11 By Public or Regulatory Authorities
The UCP Act is enforced by three public authorities in Hungary.
The National Consumer Protection Authority (NCPA) and its local inspectorates have general competence to proceed against unfair commercial practices. However, if the commercial practice concerned relates to an activity of the undertaking that is supervised by the Hungarian Financial Supervisory Authority (HFSA), such as banks, insurance companies, and financial service providers, the HFSA shall also prosecute unfair commercial practices by such entities. If the commercial practice is capable of materially affecting competition, the Hungarian Competition Authority (HCA) has the power to proceed.16 The provisions on misleading and comparative advertising vis-a-vis business partners, as well as the provisions of the Competition Act, are also enforced by the HCA.
18.104.22.168 By Consumers, Competitive Businesses or Suppliers to and Purchasers of the Goods or Services of the Business
Any person (including suppliers, consumers and competitors) may submit a (formal) complaint or an informal complaint to the HCA if she observes a conduct that infringes the Competition Act or the Act on Business Advertising (misleading of business partners, unfair manipulation of consumer choice, misleading advertising falling within the competence of the HCA). This may result, subject to the decision of the HCA, in the introduction of a competition supervision proceeding. The lodging of both formal complaints and informal complaints is free of charge. Upon request of the complainant or of the person making an informal complaint, the HCA does not disclose the identity to the undertaking concerned. A formal complaint shall be made by the use of the form published by the HCA, whereas informal complaint may be submitted without any formal requirements. Hence, even handwritten notes or letters or e-mails can be used for making informal complaints.
Consumer protection proceedings of the HFSA and NCPA can also be launched on the basis of a consumer complaint, but these authorities are also entitled to launch proceedings on their own initiative. Consumer complaints to the HFSA and NCPA are reviewed within the framework of administrative proceedings.
Article 15 (1) of the UCP Act provides that proceedings conducted under the Act shall not prevent injured parties from enforcing civil law claims, which are based on the unfairness of a commercial practice, directly before a Court. Accordingly, local consumers and businesses may file a court action for compensation of damages they have sustained. The burden of proof of the accuracy of factual claims in relation to the commercial practice shall rest with the undertaking. Further, both consumers and business partners may file court action based on the infringement of Article 2 of the Competition Act (the general clause) and claim damages as well as restitution for such infringement.17
27.2.3 Causes of Action and Range of Remedies Available to Regulatory Authorities
22.214.171.124 Injunctive Reliefs
According to the Competition Act, the Competition Council may, by an interim measure, prohibit by its order to continue the engagement in an illegal conduct or order the elimination of the unlawful situation if prompt action is required to protect the legal or economic interests of the interested persons or if the formation, development or continuation of economic competition is threatened.
Article 27 of the Act on Business Advertising also used to empower authorities and courts in the past to prohibit the disclosure of an advertisement that has not been published before if publication had breached the provisions of Act on Business Advertising. The Hungarian Constitutional Court established that the respective provision of the Act disproportionately restricted the freedom of the press and free speech, so it has been nullified as being unconstitutional in 2010.18
126.96.36.199 Causes of Action
188.8.131.52 Range of Remedies
The Competition Council of the HCA may in its decision
establish that the conduct is unlawful;
order a situation violating competition laws to be eliminated;
prohibit the continuation of the conduct that violates the provisions of any of the Acts mentioned in item Sect. 27.2.1;
where it finds that there is an infringement of the law, impose obligations;
order a corrective statement to be published with respect to untruth information.
The NCPA is entitled to
order the termination of the unlawful situation;
impose a ban of the unlawful conduct;
order the business entity to terminate the deficiencies and disparities exposed within the deadline;
ban, restrict or impose conditions regarding the supply of the goods until the infringement is eliminated;
order the temporary closure of the commercial establishment affected until the infringement is eliminated, where deemed necessary for the protection of human lives, health, physical integrity or for the prevention of dangers posing significant threats to a broad range of consumers; or
impose a consumer protection fine.
The HFSA may in administrative proceeding
issue a notice to terminate the deficiencies and comply with the law;
order the termination of the unlawful situation;
impose a ban of the unlawful conduct;
order to terminate the deficiencies and disparities exposed within the deadline, as well as to subsequently notify the Authority on the introduced measures;
ban, restrict or impose conditions on the activity until the infringement is eliminated; or
impose a consumer protection fine.