Major amendment to the Prices Act (265/2024 Coll.)

As of 1 January 2025, a major amendment to the Prices Act (No.265/2024 Coll.) is in force, bringing the biggest changes in this area since 2009. This amendment modifies the rules of price regulation, the marking of prices of goods and the powers of supervisory authorities. In this article, we will summarise the main changes and their significance in a clear way and focus on the practical implications for entrepreneurs - especially for retailers (bricks-and-mortar shops and e-shops), large food companies and wholesalers and distributors. We will also highlight the new risks (including possible fines) and outline what solutions businesses can take (with a recommendation to contact a law firm for expert assistance).

Author of article: ARROWS (JUDr. Jakub Dohnal, Ph.D., LL.M., office@arws.cz, +420 245 007 740)

Main changes under the amendment to the Prices Act

The amendment brings a number of changes. Among the most important are:

• Price assessments instead of price decisions: price regulation will now be implemented in the form of price assessments (measures of a general nature). This will formally change and unify the existing price decisions of the price authorities. In practice, this means that price assessments must be justified and are subject to judicial review. Thus, in case of disagreement with the ordered price regulation, businesses have the possibility to file a lawsuit (within 3 months of the measure's entry into force at the latest).

• Uniform publication and effectiveness of the measure: The various authorities will publish the price assessments in their own bulletins (MoF in the Price Bulletin, MoH in the MoH Bulletin, ERO in the ERO Bulletin, etc.) and authorities without their own bulletin will use the MoF Price Bulletin. The price list will normally enter into force on the 60th day after publication to allow those concerned time to prepare. However, in exceptional cases, it may come into force earlier, at the earliest on the day following publication, if the public interest requires it in an exceptional market situation. This gives the State the opportunity to react very quickly to price crises.

• Unification of powers of price authorities: the separate "price competence law" is abolished and the powers of price authorities (government, ministries, special authorities, regions, municipalities) are newly defined directly in the Price Act. Overlaps are removed and it is made clearer who regulates and controls what. The role of municipalities and regions is reduced: local authorities can only control the price regulation they themselves have issued (based on the price assessment of the MoF). Compliance with other price regulations falls under the central authorities. As a result, there is greater clarity of competences, so that businesses will know better which authority oversees prices in their sector.

• Price marking (sales and measurement): There have been several changes in the obligation to mark goods with prices. It is still the case that the seller must indicate the selling price (including VAT and charges) of the goods offered so that the consumer can see it in advance. However, the obligation to indicate the specific price (price per unit quantity) for selected packaged non-food products has been reintroduced. The Ministry of Finance will issue a decree listing the types of goods to which the mandatory specific prices apply (e.g. certain cosmetics, toiletries, cleaning products, etc.). For packaged foodstuffs, the mandatory specific price remains (except where this would be inappropriate or confusing). The previous exception has been abolished - even perishable foods sold at a discount due to impending spoilage must now display a recalculated specific price. The law also explicitly requires that price information (both sales and specific price) be unambiguous, easily recognisable and legible - thus emphasising the clarity of price labels in the shop and on the web.

• Stricter sanctions and controls: The amendment tightens penalties for breaches of price regulations. For some offences, the fines are increased - for example, the upper limit of the fine for failure to keep price records for regulated goods rises from CZK 1 million. The upper limit for the maximum amount of CZK 10 million for regulated products. CZK. The application of fines linked to unjustified profits is also being extended: already for profits of CZK 200 thousand or more. The fine can be up to five times this profit. In addition, the supervisory authorities may now also issue corrective measures (ordering the entrepreneur to arrange for immediate remedies). More rigorous price controls can be expected - clearer competences and higher penalties will motivate inspectors to punish breaches of the rules more vigorously.

• Cooperation with the Antitrust Authority: The amendment has linked prices to competition. The OCA has obtained the right to request information from price authorities (MoF, CTIA, SÚKL, etc.) and to use it to monitor competition and significant market power in the sale of agricultural and food products. This means that price controls can detect indications of e.g. cartel agreements or abuse of dominance and pass them on to the antitrust authority. Conversely, the OCA will also share information with the price authorities. Large players (especially in the food sector) may thus face coordinated attention: price infringements may also result in an investigation by the OCC and, conversely, competition offences will not remain hidden from price inspectors.

New risks and possible fines

The above changes imply new risks for businesses in the area of prices:

• Significantly higher fines: price infringements are subject to much higher penalties than before. The maximum fines have risen to up to 10 million euros. The fine can be based on the company's unjustified profit (up to 5 times the amount of the benefit received). This significantly increases the financial risk of ignoring the rules - large companies can pay tens of millions for illegal overpricing.

• Rapid state price intervention: the new rules allow the state to introduce price regulation very quickly in response to a crisis situation. Businesses can therefore face, for example, price caps on their goods from one day to the next. The risk is that a company does not react promptly and breaks the regulation - so it is necessary to monitor official gazettes and be ready to adjust prices immediately.

• Stronger controls and remedies: Aligning competences and strengthening powers means more targeted controls. Inspectors can now not only fine but also order immediate correction of detected infringements. This means that businesses can be inspected more frequently and will be forced to correct errors quickly (e.g. fill in missing price tags, reduce an inflated price, etc.) or face sanctions.

• Linking with the Office of Competition and Antitrust Supervision: price controls and antitrust supervision are becoming linked - the risk of an investigation by the Office of Competition and Antitrust Supervision in case of suspicious pricing practices is increasing. For example, unjustifiably high prices or margins detected by a price control may lead to competition proceedings. For firms, this means that a breach of the rules may be subject to double penalties (under both the Prices Act and competition rules).

Practical implications for businesses

How will the changes translate into practice for different businesses? The following are the specific implications:

Vendors (bricks-and-mortar shops and e-shops)

For retailers, the amendment means in particular new requirements for price labelling and the need for greater flexibility in pricing policy:

• Mandatory specific prices: from 1 January 2025, retailers must consistently indicate the specific price for all products where required by law. For foodstuffs this is a matter of course, but the obligation is now extended to selected non-food goods (according to the MoF decree). Shops must modify their price tags - for example, they must visibly state "Price: 50 CZK, i.e. 100 CZK/kg" for each product concerned. E-shops shall similarly modify the display of prices (automatic conversion to unit). Please note that even for discounted goods before expiry, the recalculated unit price must now be indicated. Failure to comply with these obligations may be sanctioned by the control.

• Clear and definitive prices: make sure that the price tags in the shop and the prices on the website are clear and legible. The customer must clearly see what the final price is incl. VAT and all charges. Confusion in labelling (e.g. ambiguously assigned prices) can lead to penalties. Moreover, from a marketing point of view, clear prices increase customer confidence.

• Monitoring price regulations: Traders should monitor any price assessments in the sector. Even if most goods are not normally regulated, an emergency situation may arise (e.g. for strategic raw materials or protective equipment as in the past). In addition, regulation would now take effect very soon after the announcement. It is therefore advisable to designate a responsible person to monitor the official boards and bulletins so that the company can react in time to adjust prices in the shops or e-shop.

• Price records: if you sell goods with regulated prices (e.g. medicines with a maximum price, tobacco with a fixed price, etc.), be sure to keep proper price records. The obligation to keep records remains unchanged, but failure to do so now carries a fine of up to 10 million euros. Therefore, prepare the necessary documents (price quotations, invoices) for possible inspection to prove that you are complying with the price limits.

Large food companies

For food manufacturers and suppliers, the amendment means increased attention from regulators and the need to keep an eye on pricing practices:

• Possible state intervention in prices: the state now has stronger tools to regulate food prices in crisis situations. If, for example, prices of staple foods rise significantly, the government can quickly introduce price caps at the producer level as well. Large food companies should therefore monitor economic developments and government signals. It is a good idea to have a plan in place for possible price restrictions (e.g. temporarily reduce margins, look for savings) so that the company can react promptly to the regulation and avoid sanctions.

• Increased oversight of margins: Margins and price movements at major food companies may now come under scrutiny. If the price control detects unusually high margins, it can refer this to the OCC as a trigger for investigation. Firms should therefore be able to defend their pricing - having supporting evidence to show that higher prices reflect rising costs and not an abuse of market power. It is also advisable to communicate with business partners and the public and explain the reasons for any price increases to avoid suspicions of price manipulation.

• Coordination in the supply chain: If price regulation (e.g. limiting the maximum margin) were to occur in the food supply chain, large producers cannot do without close cooperation with wholesalers and supermarket chains. It is therefore advisable to set up transparent relationships now - sharing the necessary information on prices and costs. This will facilitate possible joint compliance with price limits and reduce the risk of blaming each other for violations. Fairness in the chain also helps build trust with regulators.

Wholesalers and distributors

Wholesalers and distributors (suppliers of goods to resellers) will experience the amendment as follows:

• Chain-wide price controls: If the government imposes price regulation on a particular good, it can set limits on all links in the chain - from the producer to the store. Distributors must therefore ensure that their margins do not exceed the permitted limit. It is necessary to keep careful records of purchase and selling prices and to be able to prove that the mark-up does not exceed a specified % or amount. Failure to comply would result in fines and an obligation to return unjustified profits.

• Obligations when selling to end customers: If a wholesaler also sells to non-businesscustomers (e.g. sole traders or the public under cash & carry), it is subject to similar obligations as a retailer. They must have clearly stated end prices incl. VAT and, for the goods concerned, the specific prices. The wholesaler should therefore check that prices are correctly marked in the premises accessible to consumers (and on any e-shop) in accordance with the new rules.

• Risk of penalties for price exploitation: distributors, as an intermediate link, can raise prices significantly in times of shortages and take advantage of the situation. However, there is a new risk that in an emergency situation the state will restrict such practices, and if there is a concerted practice by several companies or abuse of a dominant position, the Office of the Competition Authority may intervene. Therefore, wholesalers should set prices cautiously. Extreme price jumps may attract the attention of regulators - it is better to avoid suspicion, for example, by always backing up high price increases with extraordinary cost increases (which you can prove).

How to prepare and minimise risks

Legislative changes create new obligations and threats, but with advance notice and the right approach it is possible to prepare for them. We recommend:

• Conduct an internal audit of price tags: make sure you are providing correct and complete pricing information for all products - in-store and online. Make sure that no specific price is missing, that prices include VAT and that they are clearly visible. Remove ambiguities (e.g. double price tags).

• Update your POSsystems and e-shop so that they can automatically calculate unit prices and print them on price tags. Set up a process so that every time the sale price changes, the specific price is recalculated (this also applies to discounts). Technology can help you a lot to eliminate errors.

• Train your staff: familiarize your staff with the new rules. Salespeople need to know about the obligation to list specific prices even for discounts. People responsible for pricing should be aware of the stiffer penalties for violating regulations and the importance of pricing records. A well-informed team can more easily ensure compliance with the law.

• Keep an eye on developments: stay up-to-date on potential pricing measures. Keep an eye on communications from the Ministry of Finance and other authorities, or set up a subscription to their websites. This will minimise the risk of missing important regulations. Also keep in touch with your business partners - exchange market information in a timely manner so that you can react to any changes in a coordinated manner.

• Consult the experts: if you are unsure about the interpretation of new obligations or the impact on your business, contact a law firm specialising in commercial law. Experienced attorneys can help you conduct a pricing compliance audit, set up contracts and terms and conditions in accordance with the amendment, and advise you on how to avoid penalties. In the event of a dispute (e.g. the need to challenge a pricing regulation in court or defend yourself in an inspection), you will be in a better position with the help of a lawyer. Investing in prevention is many times cheaper than potential penalties or litigation.

Conclusion

The amendment to the Law on Prices 265/2024 Coll. brings major changes for which entrepreneurs should prepare in time. Whether you sell to end customers or are in wholesale or food manufacturing, it pays to make the necessary adjustments and keep an eye on future developments. Ignorance of the law is no excuse - on the contrary, it can cost you dearly in the form of heavy fines. Therefore, do not hesitate to use the available sources of information and consult experts (law firm) if in doubt. This will protect your business and you will be able to continue doing business with peace of mind, even under the new rules.