Comment: The importance of consumer protection legislation on cross-border transactions

When a local company is enjoying success on the internal market, the temptation of expanding its activity in other member states of the European Union arises. The first countries targeted for the expanding are EU member states near to Romania, such as Hungary, Bulgaria, the Czech Republic or Slovakia. Although at first glance, European legislation has been harmonized within most EU countries, there are still legal aspects which continue to be under the full authority of the member states, independent from the EU, such as appointing the national authorities responsible for consumer protection and fair competition, and especially deciding on the sanctions regarding infringements brought to the legislation in such areas. This can generate a completely different approach from Member State authorities compared to Romanian authorities and also lead to heavy fines compared to those applicable in Romania. Recently, various Romanian media have published articles regarding a very substantial fine imposed by the Competition Council of Bulgaria on one of the biggest Romanian retailers, namely eMag. The articles imply that the fine has been imposed for misleading or comparative advertising. In Romania, such practices are regulated by a special Law, Law no. 158 from 18 July 2008 concerning misleading and comparative advertising. Sanctions for such practices are imposed by the Ministry of Finance or by the National Authority for Consumer Protection and consists of fines between 3,000 and 30,000 Romanian lei. So how come such a practice is sanctioned in Bulgaria with nearly 3 million euros, as the press stories imply? Why is the fine imposed by the Competition Council and not by the Authority for Consumer Protection? Although apparently confusing, the explanation is simple. Given that one of the fundamental principles of competition law is to protect consumers, misleading and comparative advertising practices have been regulated in the Bulgarian legislation on protection of competition. According to the applicable legislation, anti-competition practices, including misleading and comparative advertising are punishable by a fine of up to 10% of the involved company’s turnover. In conclusion, we recommend all Romanian companies that are preparing to expand their business in other Member States of the European Union to contact a lawyer in order to identify potential risks which may result from legislation discrepancies. By Elena Grecu, Grecu Lawyers