The European Antitrust Review 2014 • Section 3: Country chapters
Hungary: Competition Authority
In 2013, the Hungarian Competition Authority (GVH) continued to fine-tune both the regulatory framework of competition law and the institutional background of law enforcement. The motivating factors of this work have not changed over the years. First, the Authority aimed to respond to the challenges created by the economic crisis. Second, it wanted to ease the burdens faced by the undertakings involved in competition law proceedings and to simplify the proceedings for the businesses in all enforcement areas, in order to make the GVH’s proceedings as transparent as possible. Third, it wanted to enhance the effectiveness of the GVH.
Essential measures were taken in the field of M&A control. In February 2012, a new merger notification form was elaborated with less formal requirements in relation to the information and data that must be provided. For most notifications, only a limited part of the form has to be completed. More detailed data has to be provided only if the parties to the transaction identify significantly overlapping (horizontal) or related (vertical) markets (ie, if the opening of a second phase investigation seems likely).
Since 1 February 2012, the GVH has been able to make ‘simplified decisions’ in merger cases if the Authority does not want to block the transaction or set conditions or commitments to its approval and there are no clients in the case who would be counter-interested. In these cases, it is not necessary to provide an in-depth justification for the approval, thus reducing the workload of the GVH. In 2012, this simplified decision was used in around one-third of the M&A cases. According to the Global Merger Control Index 2013, provided by the Center for European Law and Economics, in the peer group comparison among 27 EU member states, Hungary’s merger control jurisdiction (together with Finland) was awarded the third-best position; further, it also received the highest points in flexibility, predictability and conciseness.
The notice of the president of the GVH and the chairman of the Competition Council on the possibility of pre-notification contacts for the parties to the M&A transactions became applicable from early May 2012. Obviously, these contacts do not replace the notification, but as a result of this system, the GVH receives notifications that are of far better quality than before and, in general, through communication between the GVH and the merging parties, merger analyses have become faster and more effective.
As a result of the introduction of the possibility of ‘simplified decisions’ and pre-notification contacts, the actual time spent on investigating merger cases has substantially decreased. Meanwhile, the average time spent on first phase merger proceedings in 2011 was 43 days, which reduced to 31 days in 2012. The GVH spent 76 days on second phase merger proceedings in 2011 and an average of only 59 in 2012.
Concerning the legislatory steps taken in the area of antitrust, the introduction of the revised fining notice in January 2012 was the most important development. The new method still emphasises the importance of the deterrent effect of fine setting on cartels that are destroying competition, but – due to the financial crisis – it also takes into consideration the financial situation of the parties by enabling fines to be reduced or for payments to be made in instalments.
As to internal, organisational issues, three major changes are worth mentioning.
The setting up of a new customer service section in 2011 has proven to be justified. This section of the GVH filters non-relevant complaints and indications of non-relevant anomalies that arrive at the Authority in great numbers. In 2012, roughly 6,000 indications of these kinds were submitted to the GVH. The customer service section found more than two-thirds of these irrelevant and did not forward them for further analysis to the case-handlers. As a result, the Authority can allocate human resources to the investigation of violations that represent real threats to competition.
Since March 2012, two new sections – the merger section and the antitrust section – have been fully operational within the GVH. With this change, the GVH has abandoned the previous, basically sector-based handling of cases. This change allows the Authority to focus on case-type specific issues and to apply the Competition Act consistently throughout the different sectors of the economy.
The most recent step concerning the adjustment of the system was the reorganisation of the institutional background of cartel enforcement through the separation of the functions of cartel detection and cartel investigation. It is expected that this will further increase the Authority’s effectiveness.
The GVH places great emphasis on raising the awareness of society and, most importantly, of businesses and of competition issues. A survey commissioned by the GVH in 2012 showed that in spite of the repeated competition culture efforts of the GVH, businesses in general, and SMEs in particular, still do not have sufficient knowledge of competition law. The findings of the survey confirmed the experience of the GVH: SMEs are involved in competition proceedings a lot more than large-size undertakings. This is why in December 2012 the GVH created a new web page on its website about competition compliance (www.megfeleles.hu). This web page provides businesses with basic information about the GVH, competition law, ‘dos and don’ts’ and so on. In addition to this, the GVH has concluded cooperation agreements with SMEs’ organisations and accountant associations in order to promote an educational campaign by, for example, hosting seminars, delivering speeches on these seminars and delivering brochures prepared by the GVH. As part of this exercise, the GVH launched an internal ex-ante impact assessment project in order to compute the social usefulness of its competition law enforcement in the country. Very conservative calculations show that between 2008 and 2012, as a result of prohibitions of restrictive agreements, abusive practices and by blocking anti-competitive M&As, consumers benefitted around 58 billion forints. This is more than four times the budget allocated to the GVH between 2008 and 2012, meaning that competition law enforcement is a ‘profitable’ activity for society.
In 2013, the GVH will focus on the traditional areas of competition law, such as cartel enforcement and the detection of bid-rigging activities. Due to agency competencies of the GVH in the enforcement of UCP-related consumer protection issues, the Authority has continued to foster efficient markets by counterbalancing possible information deficiencies. In addition to these, further priority areas will be the support of compliance programmes of undertakings, and the simplification of merger proceedings and competition problems relating to local markets (eg, funeral services).
Next Chapter: Ireland: Competition Authority