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Covid-19

Possibility of establishing maximum prices as a part of the anti-crisis regulations

1 . The possibility of establishing, by way of regulation, by the minister competent for economic affairs in consultation with the minister competent for health and the minister competent for agriculture and rural development, maximum prices or maximum wholesale and retail margins for certain goods or services is one of the solutions of the Act of 2 March 2020 on special solutions related to the prevention, counteracting and combating of COVID-19, other infectious diseases and crisis situations caused by them (as later amended, “the Act”).

The establishing of maximum prices or margins will be possible for goods or services that are significant for the protection of human health or safety or household maintenance costs. Such wording is broad. One can imagine that, depending on the development of the situation, it may include not only masks, protective gloves or disinfectant liquids, but also food for example.

It is not specified for how long the minister would have the power to regulate prices. When setting maximum prices the minister may take into account the level of prices in the period preceding the introduction of the state of epidemic threat, as well as justified changes in production and supply costs.

2 . Importantly, the Act also provides for severe fines:

  • An entrepreneur using prices or margins higher than those set by the minister is subject to a fine of PLN 5,000 up to PLN 5 million. When imposing a penalty, the authority (in terms of their properties: voivodeship inspector of commercial quality of agri-food products, voivodeship inspector of Trade Inspection) may make the decision immediately enforceable in whole or in part, if required by security protection or public order.
  • The President of the Office of Competition and Consumer Protection (the Polish Competition Authority, “President of the OCCP”) may impose a financial penalty of up to 10% of the turnover achieved in the financial year preceding the year of the penalty being imposed, if the entrepreneur, even unintentionally, has repeatedly, in the case of many goods or services or on a large scale, violated the prohibition of establishing prices or margins higher than those set by the minister.
  • The President of the OCCP may impose a financial penalty of up to 5% of turnover in the financial year preceding the year of the penalty being imposed (no more than PLN 50 million), if the entrepreneur, even unintentionally: (i) did not provide information requested by the President of the OCCP or provided false or misleading information, or (ii) prevents or hinders the President of the OCCP from starting or carrying out inspections.

3 . In practice, problems may arise in the application of the discussed provisions, e.g. when assessing what increase in prices justifies their regulation, or what factors should determine the introduction of regulated prices.

In accordance with article 538 of the Civil Code if, at the time and in the place of execution of a sale contract, a regulation is in force providing that a price higher than a specified price (maximum price) cannot be paid for things of a given type or kind, the buyer is not obliged to pay a higher price, and the seller who receives a higher price is obliged to return the difference to the buyer. 

Therefore, if such a regulation were issued, entrepreneurs would be able to claim from the contractors a refund of the difference between the prices (paid and maximum).