NE BIS IN IDEM – DOES IT APPLY IN PARALLEL CONSUMER PROTECTION AND COMPETITION PROCEEDINGS IN HUNGARY?

14 March 2024

The "ne bis in idem" principle has its roots in criminal law, to avoid prosecuting someone twice for the same criminal conduct. Can the principle be applied in Hungary when consumer protection and competition authorities impose administrative sanctions against the same person? In a recent case, the Hungarian Supreme Court decided this question.

1. Facts

The Plaintiff creates a resale market for tickets to live music, sports, and entertainment events on its international online platform.

In 2018, the Government Office of Budapest (“Government Office”) initiated a consumer protection procedure against the Plaintiff. According to the complaint, the Plaintiff's website displays urgent phrases during the ordering process such as "Tickets are very popular for this event." etc.

In January 2019, the Government Office adopted a decision imposing a HUF 1.5 million consumer protection fine on the Plaintiff for violating the Hungarian Act on prohibiting unfair commercial practices against consumers[1]. According to the reasoning of the decision, the Plaintiff's aim was to stress the customers by using vague, unclear, ambiguous sentence and to significantly influence the transaction decision.

Furthermore, the Competition Authority (“Defendant”) also initiated a competition procedure against the Plaintiff.

Based on largely identical facts, the Defendant also found that the Plaintiff had engaged in unfair commercial practices and imposed a total fine of 472 million HUF on the Plaintiff for unfair competition.

2. Statement of claim

By its statement of claim, the Plaintiff requested, among others, the annulment of the Defendant's decision for breach of essential procedural requirements. Plaintiff claimed that the Defendant's procedure and decision violated the principle of “ne bis in idem”.

3. First Instance Court decision

The first instance court (“First Instance Court”) annulled the Defendant's decision, stating that the decision violated the principle of ne bis in idem.

As a starting point, the First Instance Court stated that the ne bis in idem principle may be violated if there are the procedures in which the identity of the person subject to the proceedings, the facts and the legal basis are the same.

The First Instance Court held that all the above-mentioned 3 elements are fulfilled in case of the Plaintiff.

First, the Defendant examined a commercial practice of the Plaintiff which had already been the subject of a previous decision of the Government Office.

Second, the facts of the two proceedings are also identical, since both authorities examined the same period.

Finally, both the Government Office and the Defendant, as the consumer protection authority with general and special powers respectively, had examined compliance with the Hungarian Act on the prohibition of unfair business-to-consumer commercial practices.

4. Request for judicial review

In its request for judicial review, the Defendant requested, among others, the annulment of the judgment of the First Instance Court, arguing that there had been no breach of the ne bis in idem principle.

The Defendant claimed that the period examined by the Government Office and the Defendant was not identical, and there was no evidence of an overlapping period. In addition, the Government Office has examined only one commercial practice, while the Defendant has also examined other two commercial practices.

5. Decision of the Hungarian Supreme Court

The Hungarian Supreme Court found that the Defendant's request for judicial review was party well founded as only certain parts of the Defendant's decision violated the ne bis in idem principle.

First, the Supreme Court laid down that the principle of ne bis in idem essentially developed from the prohibition of double criminality and double punishment in criminal proceedings.

However, according to the case-law of the Hungarian Constitutional Court, the constitutional principles based on criminal law must also apply to proceedings of a different legal nature, aimed at sanctioning unlawful conduct, for example, in the case of administrative proceedings for competition (administrative) sanctions, if the sanctions imposed are of a criminal nature.

Based on the case-law of the European Court of Human Rights (“ECtHR”) and the Court of Justice of the European Union (“CJEU”), the Hungarian Supreme Court had to examine whether the punitive legal consequences were imposed on the same offender for the same unlawful act in the two administrative proceedings.

The Supreme Court found that both authorities imposed punitive legal consequence as both procedures and sanctions aim to deter the business entity to unfair practices.

The identity of the offender can be clearly established.

Furthermore, both decisions sanctioned, inter alia, the Plaintiff's actions of publishing urgent information, the content and visual presentation of which could create psychological pressure and influenced consumer decision-making.

Based on the above, the Supreme Court considered that the Defendant’s decision breached the ne bis in idem principle, however, other parts of the Defendant's assessment were not violated this principle due to their different scope and aim.

6. Comment

In its decision, the Hungarian Supreme Court confirmed that the ne bis in idem principle can be applied to administrative sanctions of a criminal nature.

The decision also reaffirms that the Engel-test, established by the ECtHR in the Engel and Others v. the Netherlands case, shall be applied in Hungary in determining whether the administrative sanction is of a criminal nature, which is subject to the ne bis in idem principle.[2]

According to the Engel-test, the first criterion of the assessment is the legal classification of the offence under national law, the second is the very nature of the offence and the third is the degree of severity of the penalty that the person concerned risks incurring.

As both procedures and sanctions of the Government Office and the Defendant aim to deter the business entity to unfair practices, moreover, fines are also of a criminal nature, the Supreme Court found that the Defendant’s decision has a criminal nature and thus it is subject to the “ne bis in idem” principle”.

Given that it was out of question that the administrative procedures were directed against the same person, to trigger the application of the ne bis in idem principle, the real question was how to establish whether the two authorities examined the same unlawful acts?

To address this question, the Supreme Court relied on the CJEU decision rendered in the Van Esbroeck case, in which it was held that not the legal qualification of the acts, but identity of the factual basis of the cases leading to the sanctions, shall be considered the relevant factor.[3]

Based on the above, in case parallel administrative proceedings are brought against a person  in Hungary on the basis of the same facts, the person may challenge the administrative procedures and fines, relying in the violation of  the ne bis in idem principle.

(In the article, we analysed Supreme Court Decision published under No. “BH 2024.1.20.”)