The present article, the fifth and last in our series, focuses on the changes to the applicable enforcement mechanisms contained in Book XV of the Belgian Code of Economic Law.
One of the main objectives of the EU Omnibus Directive was to improve the enforcement of consumer rights and consumer redress. In this context, the Act of 8 May 2022 amended the applicable enforcement mechanisms in Belgium, resulting in (i) a list of non-exhaustive and indicative criteria for the impostion of fines, and (ii) an increase of the criminal penalty levels.
The new legislation introduced a series of non-exhaustive and indicative criteria that should be considered when imposing (administrative or criminal) fines. These criteria are the following:
- The nature, gravity, scale, and duration of the infringement;
- Any action taken by the trader to mitigate or remedy the damage suffered by consumers;
- Any previous infringement by the trader;
- The financial benefits gained or losses avoided by the trader due to infringements;
- Penalties imposed on the trader for the same infringements in other Member States in cross-border cases; and
- Any other aggravating or mitigating factors applicable to the circumstances of the case.
These criteria should enable both the Economic Inspection and the public prosecutor's office to uniformly determine the level of the applicable penalties and also consider infringements traders have committed in other EU Member States. These criteria can also be used by them when proposing settlement amounts to traders as an alternative to further prosecution.
Higher criminal penalties
As mentioned above, one of the main objectives of the EU Omnibus Directive was to improve the enforcement of consumer rights and consumer redress. Accordingly, to ensure that penalties have a deterrent effect, the Omnibus Directive required the Member States to set the maximum level for such infringements at at least 4% of the trader's annual turnover.
For this reason, the Belgian legislator was forced to thoroughly revise the level of the applicable maximum and minimum criminal penalties applicable to breaches of consumer protection legislation. Depending on the type of infringement, categorized in 6 different “levels”, the maximum fine for such infringements will be set at 4% (for levels 1 and 2) or 6% (for levels 3 to 6) of the trader's annual turnover. If no information about the trader's annual turnover is available, the maximum fine shall be set at EUR 2 million.
The legislator also clarifies that the annual turnover is to be seen as the total turnover of the undertaking of the trader in the (most recently completed) financial year preceding the imposition of the fine, excluding the taxes. In case of a cross-border infringement, the annual turnover achieved in the other countries (worldwide) where the infringement was committed can be included in the calculation of the annual turnover. The total annual turnover achieved in the EU Member States concerned by a cross-border enforcement case shall in any case be included in the calculation.
The existing lump sum penalties will also be retained, in addition to the percentages based on turnover, to prevent traders from using artificial constructions to keep the penalty amount as low as possible. If, for example, a trader has an annual turnover of EUR 1,000,000 and committed an infringement to which a “level 2” penalty applies, the trader can still face a fine of EUR 80,000 (the previously applicable maximum of EUR 10,000 x multiplication factor of 8), instead of the alternative fine which would only be EUR 40,000 (4% of EUR 1,000,000).
The implementation of the Digital Sales Directive and the Omnibus Directive brought several significant changes to Belgian consumer law. To ensure better consumer protection enforcement, the legislator made important changes to the applicable enforcement mechanism (including an increase of the applicable fines). In order to prevent any enforcement actions, we are happy to assist traders operating in a B2C context, especially in a digital context, to re-evaluate their website disclosures, their general terms and conditions, pre-information documents, and their consumer contracts.
Should you require any assistance in the field of (digital or non-digital) consumer law, please contact us.