Chain Stores Penalized for Unfair Business Practices in the Czech Republic

Several retail chains in the Czech Republic have been found guilty of violating new rules for indicating discounts. Some repeatedly used a simple trick: they charged a higher price at the cash register than the price indicated on the shelf. The retail chain Penny Market once again received the highest penalties for dishonest business practices from the Czech Trade Inspection Authority. Other chains were not completely faultless, either. The threat of million-dollar fines for chains with billion-dollar profits does not seem to be entirely effective.

Penny received the most fines for dishonest business practices during last year’s quarter. The Trade Inspection Authority imposed a total of 42 fines on retail chains during the mentioned period, amounting to almost three million crowns. More than half of the sanctions, amounting to 1.7 million, were assessed for the Penny retailer. The highest fine of 600,000 crowns was imposed for selling alcohol to minors, but the rest were related to unfair practices.

Penny received a fine of half a million crowns for charging prices different from those indicated on the shelf. During seven control purchases made from January to March in the Karlovy Vary and Pilsen regions, controllers found a difference of 178 crowns to the buyer’s detriment. The largest detected differences were 30 crowns, including Franz Josef Kaiser olives gift packs.

A second circle of unfair conduct punished by the inspection was false discounts. If a merchant complies with the law effective from last January as it should, a consumer can compare the lowest price of a product for the last thirty days with the current price of the product after providing a discount. Penny violated the Consumer Protection Act on a large scale in this respect.

The Trade Inspection Authority has been regularly imposing fines amounting to tens of millions of crowns on retailers for over ten years, but the shortcomings are repeated. Chains achieve billion-dollar profits, for example, Penny earned 1.2 billion crowns the year before last. A fine in the order of millions means a few per million of the achieved profit.