Czech energy regulator imposes record CZK 4.75 million fine on Armex Energy

The Energy Regulatory Office (ERÚ) has imposed a record fine of CZK 4.746 million on Armex Energy for unfair commercial practices. It is the highest penalty to date imposed on a single supplier for anti-consumer conduct. According to the regulator, the company committed 55 individual violations against consumers. The decision is final. ERÚ spokesperson Michal Kebort told the Czech News Agency (ČTK) today. The agency is seeking comment from the company. Armex Energy appealed the first-instance decision, but the regulator rejected its appeal.

„The consumers concerned had agreed fixed-price products with this energy supplier. But when the original fixed-price contracts ceased to be advantageous for the company, the supplier sought to move customers to other products at substantially higher prices,“ said Stanislav Trávníček, chairman of the ERÚ Council.

According to the regulator, Armex Energy sought to switch the fixed-price products to so-called spot-priced products, whose prices change continuously in line with developments on the exchange. By their very nature, ERÚ said, these are the opposite of fixed-price contracts, to which consumers were entitled under the agreements they had signed. In letters to customers, the supplier also stated that if they did not agree to switch to spot prices, they could choose either an alternative tariff product or terminate their contract.

„In the administrative proceedings, Armex Energy argued that its general terms and conditions, among other things, entitled it to make such a unilateral change to the contract. However, the general terms and conditions in force when the consumers concerned signed their contracts did not contain any such provisions. The supplier changed them later, purely for the purpose of avoiding its obligations,“ said Markéta Zemanová, a member of the ERÚ Council.

According to ERÚ, the supplier cited extraordinary circumstances brought about by the energy crisis, which was just beginning at the time. „Even an energy crisis cannot excuse a supplier, as the stronger party to a contract, for so blatantly abusing its position against consumers. The offence described is so serious in both nature and scope that we have imposed a record penalty, close to the statutory maximum of CZK 5 million under the Consumer Protection Act,“ Trávníček said.

In addition to these unfair commercial practices, the ERÚ decision also took into account the company's use of an aggressive commercial practice in three cases. In those cases, it demanded payment for energy supplied to customers without their having ordered it. In a further 15 documented cases, the company violated the Energy Act by failing to meet the deadline for handling billing complaints.

The fine surpasses the previous record penalty imposed by ERÚ, which in 2019 fined Stabil Energy CZK 4 million for unfair commercial practices. The company lost its licence a year later.

Armex Energy supplies electricity and gas and says on its website that it has almost 80,000 customers. It is also involved in selling fuel and operating service stations, Travel Free shops and casinos, as well as property development, hotels and catering. The company is based in Děčín. Its revenue in 2021 exceeded CZK 2.2 billion. Armex Energy was founded by entrepreneur Hynek Sagan, who remains its majority owner.