Advancing the Digital Era: Czechia’s Digital Economy Act Aims to Safeguard Online Users
Source: Legal Industry Review, January 2024
Authors: Mgr. et Mgr. Ing. Jan Tomíšek, Ph.D., Mgr. Michal Nohel
The Ministry of Industry and Trade wants to protect online users and prepare Czechia for the digital era. Maintaining safe online environment and enabling the development of innovative companies is the main objective of the draft Digital Economy Act, which has passed the inter-ministerial comment procedure and now pursues further the Czech legislative process.
The draft law follows on the directly applicable EU Digital Services Regulation (2022/2065) and the European Data Governance Regulation (2022/868) and seeks to replace Act No. 480/2004 Coll., on certain information society services, which constituted a response to the E-Commerce Directive from 2000 and “enshrined” the Czech safe harbour system for intermediary services and set the conditions for the commercial communications distribution in the digital environment.
Importance of Digital Safety
“Digital services and modern technologies are becoming an increasingly firm part of our lives. And more and more of our time is also spent in the online environment. It makes our work easier, it’s a source of entertainment, and for many it’s a way of earning money. But that is why this environment must be as safe as possible,” said Minister of Industry and Trade Jozef Síkela.
In addition to a functioning internal market and a competitive and innovative digital ecosystem, the draft law seeks balance. It balances user protection and a safe digital environment where illegal content is minimized. Meanwhile, it strengthens the principles of freedom of expression. It also upholds the right to hold and disseminate opinions.
The Czech Telecommunications Office (CTO) will serve as the digital services coordinator. It will be given powers in digital services and data mediation. Supervisory powers in personal data protection will be given to the Office for Personal Data Protection. This office will also handle commercial communications dissemination. Additionally, it will act as the contact point for cross-border dispute resolution.
Country of Origin Principle
The digital economy Act confirms the “country of origin” principle and, with certain exceptions, Czech legislation does not apply to service providers who provide their services in Czechia although they are established in another Member State.
For commercial communications distribution via email, traders are still allowed to do so provided that they received contact from their customers in connection with the sale of product or service, they send advertising for similar products and services via email, customers have not chosen not to receive commercial communications via email and they may opt out in a simple way. Time test under which 3 years have not elapsed since the last sale of the product or service is to be amended. Prior consent is required for all other cases.
Certification and Registration Processes
Applications for certification as an out-of-court dispute resolution body will be submitted to the CTO. Applications for trusted flaggers and verified researcher status will also go to the CTO. In the context of data governance regulation, the CTO will be the competent authority for data mediation services. It will also handle registration of recognized data altruism organizations.
In the Czech context, the draft law regulates multiple offences arising from the abovementioned European legislation, such as offences concerning commercial communications dissemination, offences by providers of commercial platforms and internet search engines, or offences by providers of intermediary services, hosting services and online platforms, including markerplaces, under the digital services regulation. The same applies to data brokerage services offences under the data governance regulation.
The draft law provides for fines of up to CZK 10 mil. or 6% of the offender’s net turnover for the last completed accounting period, or a ban on activity.
