The Hungarian Competition Authority (HCA) recently published a strategy paper presenting its views on consumer protection in the digital age. The paper subtly indicates that the HCA will continue to follow the European Commission's guidance in this regard. The paper highlights the measures which the HCA deems necessary to protect consumers and keep up with the developments and companies central to this process.
As a premise, the HCA stresses that consumers are highly vulnerable to certain tech giants and other online service providers. This is because the overwhelming data flow which is inherent to the emerging digital age has rendered the traditional consumer protection approach meaningless.
According to the HCA, to cope with the new dynamics of the market, authorities and consumers need a new approach to:
- consumer protection issues; and
- transactional decisions.
The HCA also noted that algorithms and artificial intelligence are likely to become highly relevant in the foreseeable future and urged competition authorities to prepare to respond accordingly. The HCA believes that it is paramount that consumers with a limited understanding or interest in technology both remain protected and benefit from new inventions.
In light of the above, the HCA has defined its approach as follows.
According to the HCA, the problems posed by the digital markets may be best solved by proceedings which aim to foster compliance rather than impose penalties. These proceedings mainly aim to provide a solution for prevalent topics. In addition to traditional goals, their purpose is to function as an exemplary case or guidance. While these cases may also involve penalties, these are not of utmost importance. The HCA has already initiated proceedings using this approach. These cases involved Instagram celebrities with paid content and online accommodation booking sites, among others.
Proceedings against global players
According to the HCA, these cases may require an assessment of the overarching effects of the specific conduct, including those which occur outside Hungary. Therefore, the HCA deems it necessary to consider the approach of other authorities, especially those from the European Union. However, the HCA remains confident to take action on an international scale and expects international players to align their practices with its guidance, where relevant.
Prioritising novel cases
The HCA has prioritised the issues pertaining to consumer protection in the digital markets. In particular, the HCA intends to address cases which raise novel questions and pose problems which did not exist or were not addressed prior to the digital age. The HCA has even gone so far as to indicate that it intends to initiate at least one such novel proceeding every year. It also intends to orchestrate international actions if necessary and has indicated that it will not shy away from leading the way in this regard.
The HCA may use invasive tools to map a market before deciding whether an investigation into a certain conduct is necessary. One such tool is market analysis, which the HCA intends to employ to better understand the functioning of comparison tools.
In its strategy paper, the HCA introduced the notion of 'super complaints' (ie, complaints which are addressed directly to the HCA by or through, for example, authorities or consumer associations). Although the HCA does not differentiate between complaints, such pre-selected and comprehensive presentations by professional organisations may allow for more intensive and swifter intervention by the HCA.
Fostering international cooperation
The HCA concluded its strategy paper by highlighting its intention to foster international cooperation around consumer protection, especially within the framework of the Consumer Protection Cooperation Network and under the aegis of the European Commission's New Deal for Consumers.
In recent years, the HCA has become a dynamic authority which aims to effectively enforce competition, particularly in novel cases. It has also visibly shifted its focus on to consumer protection and – most recently – the digital markets. As such, it has devoted significant resources to protecting consumer interests, which has somewhat slowed down enforcement in other areas. However, the HCA's new-found focus has also led it to issue groundbreaking decisions.
The HCA's strategy paper gives market players insight into how it perceives its activities. The ambitious undertaking to solve at least one novel issue every year may represent, to some, an overly eager approach to enforce competition on the digital markets and among major international companies. The question remains as to whether such a vigorous approach from the HCA is necessary.
As mentioned above, the HCA is planning to initiate an analysis of the online comparison services market. Therefore, undertakings which perform such activities may expect data requests in the near future. This inquiry is not constrained to price comparison websites, but extends to any online service which allows for product comparisons. Further, players which also market their own products through such services may expect a high level of scrutiny. In its analysis, the HCA is expected to thoroughly review whether consumers are provided with all information regarding the basis of a comparison and the proof regarding the lack of bias in the algorithms.
All other undertakings which are active on the digital markets may be subject to the HCA's scrutiny. If the authority truly intends to provide continuous guidance regarding novel issues and compliance, the number of tech companies approached by the HCA may increase significantly in future.
By Andras Nagy, Associate Schoenherr