Details of the irregular practice of the provider
Back in 2017, the Authority found that in certain cases, UPC Kft. breached the guarantee rules by reclaiming not only the discounts applied, but also a part of those received by the subscribers in their former – expired – contracts when terminating a fixed-term contract. Thus, using a scheme that could be called “penalty inheritance”, the provider also invoiced its subscribers a part of the discounts granted in former contracts that had already been terminated and preceded the given contract, consequently they had to pay a significantly higher penalty.
The provider committed another infringement by calculating the discounts in an amount higher than that prescribed by law in cases where the subscriber used multiple services simultaneously. Namely, in such cases UPC did not calculate the discount rate amount from the fee of the promotional indefinite term service, but from the list price of the service. The provider also exhibited its unlawful practice in its General Terms and Conditions (GTC).
Consequences of the infringement
Due to the infringements, the Infocommunications Authority imposed a fine of HUF 20 million on UPC, requested it to modify the unlawful sections of its GTC, and also requested that in the future, UPC only claim from its subscribers the reimbursement of the discounts stemming from the fixed term nature of terminated contracts.
With its erroneous practice, UPC endangered hundreds of thousands of subscribers, and the interests of several hundred subscribers had been violated. The infringement also had a significant impact on the market of electronic communications services, as the provider bound subscribers to itself using unlawful market instruments. The provider challenged the decision of the Authority, but the Supreme Court upheld it.
What happens when a fixed-term contract is terminated?
When a fixed-term contract is terminated – as providers usually provide discounts to their subscribers in return for the commitment – providers may reclaim the discounts from their subscribers, but the extent and application conditions of this are stipulated in the regulations pertaining to electronic communications. This legal consequence is also applicable if the contract is terminated by the provider due to a breach of contract by the subscriber. However, if the subscriber has concluded a contract for an indefinite term, they may terminate the contract anytime, without further legal consequences.