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AFCA has taken action against the charging of incorrect VAT amounts in energy supply contracts in relation to the energy price cap

The Austria Federal Competition Authority (AFCA) has been made aware of the company Max Energy Austria Handels GmbH (Max Energy) through a complaint lodged via its whistleblowing system.

On its website, the company based its calculation of the value added tax due on the first 2,900 kWh of energy, to which the Austrian Government’s energy price subsidy applies, on the consumer price less the energy subsidy (10 cents/kWH). What it should have done was calculate the VAT based on the market price for electricity.

Max Energy is a supplier of electricity and gas based in Vienna.

Following an initial investigation into the facts of the case, the AFCA approached the company asking for a statement on the alleged misleading commercial practice according to the Unfair Competition Act (UWG). False information or any other deception of market participants in relation to the price or the manner in which the price of a product is calculated can constitute a misleading commercial practice.

No disadvantage for other competitors – consequences for consumers due to misleading information

Companies should not create a competitive advantage for themselves over their competitors by providing misleading information. By showing a VAT amount that was too low, the company was able to offer a more favourable price than other companies. Consumers might have paid less for their electricity as a result but the VAT will have to be paid retrospectively. Consumers have also been denied the opportunity of comparing prices based on correct information.

The company has cooperated with the AFCA and taken immediate action to remedy the infringement and correct the information on its website. In addition, the company has contacted the competent tax office to pay its VAT arrears.

AFCA’s powers in case of unfair competition

The AFCA is entitled to assert claims for a cease-and-desist order pursuant to § 14 para. 1 UWG to fulfil its remit of ensuring effective competition and preventing distortions or restrictions of competition. It may therefore investigate complaints into unfair, aggressive or misleading commercial practices and refer such cases to the civil courts.