We have already mentioned the new regulation in the field of consumer competitions in our legal circular of July 2016 in connection with the promulgation of Act No. 186/2016 Coll., on Games of Chance (hereinafter the “Act on Games of Chance”), which will replace Act No. 202/1990 Coll., on Lotteries and Other Similar Games, as amended (hereinafter the “Lottery Act”). The Act on Games of Chance does not regulate consumer competitions in its provisions, with the effective date of this Act and the related repeal of the Lottery Act being set for 01 January 2017. In this legal circular, we have prepared a brief summary of the legal regulation under which consumer competitions will be assessed from 01 January 2017, and what effect this has on entities organising consumer competitions.

Before the summary itself, it is necessary to draw attention to the judgment of the Supreme Administrative Court of 24 August 2016, Ref. No. 8 As 136/2015-51, in which it was established, inter alia, that the legal regulation of consumer competitions as regulated by the Lottery Act in its provision of Section 1(5) considerably restricted consumer competitions. This provision showed considerable signs of incompatibility with European Union law, namely with Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the internal market of 11 May 2005 (hereinafter the “Directive on Unfair Commercial Practices”). According to the Directive on Unfair Commercial Practices, a consumer competition is undoubtedly a commercial practice and should be assessed as such.

The Lottery Act in the above-mentioned provision considerably restricted consumer competitions, which was and currently is in conflict with Article 4 of the Directive on Unfair Commercial Practices. According to this Article, it was not possible for Member States (of the European Union) to adopt regulation in this area that is stricter than that stipulated by the Directive on Unfair Commercial Practices (or such regulation that would further restrict the freedom to provide services or the free movement of goods in the area of commercial practices). For these reasons as well, the Act on Games of Chance no longer regulates consumer competitions, but the organisation of consumer competitions will be limited primarily by the general restrictions set out in Act No. 634/1992 Coll., on Consumer Protection, as amended (hereinafter the “Consumer Protection Act”).

According to the regulation contained in the Consumer Protection Act, when operating a consumer competition, it is necessary to ensure primarily that this competition is not an unfair commercial practice within the meaning of Section 4 of the Consumer Protection Act. Of course, it will still be necessary to bear in mind that the consumer competition organised does not fulfil the characteristics of a game of chance under the Act on Games of Chance. According to the definition set out in Section 3(1) of the Act on Games of Chance, a game of chance is such a game, bet or lottery into which the bettor places a bet whose return is not guaranteed, and in which the win or loss is decided wholly or partially by chance or an unknown circumstance. In accordance with the definition of a bet set out in this Act, there will be no bet if participation in the competition is conditional, for example, on the purchase of certain goods, provided that its price does not exceed the usual price. If the competition operator decides to include a bet in the competition (e.g. participation in the competition will be conditional on the purchase of goods whose offered price will exceed the usual price – thus will include a bet), then in accordance with the above definition of a game of chance, they will have to exclude the element of chance or unknown circumstance from the decision-making (this is excluded, for example, in creative and knowledge competitions).

In view of the above, when setting up a consumer competition, it is necessary to bear in mind both that this competition is not an unfair commercial practice in accordance with the Consumer Protection Act, but also that this competition does not fulfil the characteristics of a game of chance under the Act on Games of Chance (in which case the operator of such a game would have to fulfil additional obligations under this Act).

The change in legal regulation thus opens the door to consumer competitions based on previously prohibited or difficult-to-implement game models. In particular, we have in mind the organisation of consumer competitions whose winners are decided by chance (lottery).

Kamil Žylka

Law Firm Mašek, Kočí, Aujezdský www.e-Advokacie.cz – on-line legal advice

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the Association for Electronic Commerce (APEK) as legal circular No. 11/2016 intended for members of this association.

This text was translated from Czech to English using an AI translator.