Hungarian Competition Authority
Hungary
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Hungarian Competition Authority

Hungarian Competition Authority

Hungary

From the enforcer: Hungary

Address: Alkotmány u 5., Budapest 1054, Hungary
H-1391, Budapest 62, PO Box 211, Hungary
Tel: +36 1 472 8900
Web: www.gvh.hu

Contacts

Mr Csaba Balázs Rigó
President

Mr László Bak
Vice President

Mr András Tóth
Vice President and Chairman of the Competition Council

Ms Annamária Tevanné Südi
Secretary General

International Relations:

Ms Gabriella Szilágyi
Head of the International Section
Tel: +36 1 472 8938
Email: [email protected]

Questions and answers

How long is the head of agency’s term of office?

The president of the Hungarian Competition Authority (GVH) is appointed for six years.

When is he or she due for reappointment?

Mr Csaba Balázs RIGÓ has been appointed as the President of the GVH in April 2020 and his tenure expires in April 2026.

Which posts within the organisation are political appointments?

Pursuant to the relevant provisions of the Hungarian Competition Act (Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices), the President of the GVH is nominated by the Prime Minister and appointed by the President of Hungary for six years. The two Vice-Presidents are proposed by the President of the GVH to the Prime Minister, who, if in agreement, submits the nominations to the President of Hungary for appointment. The Vice-Presidents are appointed by the President of Hungary, who, at the same time, entrusts one of the two Vice-Presidents with the responsibilities of the Chair of the Competition Council. The President and Vice-Presidents are appointed for a term of six years. After the expiry of the six-year period such appointments may be renewed, with the proviso that the Chair of the Competition Council may be reappointed only once.

What is the agency’s annual budget?

The budget of the GVH for 2019 was 3,754.8 million Hungarian forints, including the sum that can be used for the activities of the OECD-GVH Regional Centre for Competition in Budapest, which was 158 million forints last year.

How many staff are employed by the agency?

As of 1 January 2020, there are 115 staff members at the GVH.

To whom does the head of the agency report?

Each year, the President of the GVH submits an annual report to the parliament and, upon request, to the competent parliamentary committee, on the activities of the GVH and, on the basis of the GVH’s law enforcement experience, on how fairness and freedom of competition are being observed. At the request of the government, ministers or international organisations, the President of the GVH reports on the experience of the GVH and the issues relating to competition.

Do any industry-specific regulators have competition powers?

In Hungary industry-specific regulators do not have competition powers; however, there are certain specific exceptions. On the one hand, the telecom regulator – the National Media and Infocommunications Authority – applies significant market power ('SMP') rules on the basis of the competition law principles.

Furthermore, an amendment in force since November 2012 limits the scope of the application of competition law when the object of the GVH procedure involves agricultural products. Article 93/A (1)-(4) of the Hungarian Competition Act states the following:

"Article 93/A (1) In respect of agricultural products an infringement of the prohibition pursuant to Article 11 shall not be established if the distortion, restriction, or prevention of competition resulting from an agreement pursuant to Article 11 does not exceed the extent, which is necessary to attain an economically justified, legitimate income and the player of the market affected by the agreement is not shut out from the attainment of such income.

(2) The minister responsible for agricultural policy shall establish whether the conditions of the exemption pursuant to paragraph (1) are met.

(3) In the course of an investigation of the infringement of the prohibition pursuant to Article 11 in respect of an agricultural product the Hungarian Competition Authority shall obtain the statement of the minister responsible for agricultural policy pursuant to paragraph (2) and shall proceed in line with it. The minister responsible for agricultural policy shall provide its statement within sixty days from the receipt of the inquiry of the Hungarian Competition Authority, for the period of which the Hungarian Competition Authority shall suspend its proceeding.

(4) The competition council proceeding in the case shall suspend the imposition of a fine in the case of an agreement infringing Article 11 where the infringement has been committed in respect of an agricultural product. In such a case the competition council proceeding in the case asks the parties to the agreement or the concerted practice to bring their conduct in line with the legislation by setting a time limit. If the time limit expires to no effect, the competition council proceeding in the case shall impose a fine."

If so, how do these relate to your agency’s role?

The GVH closely cooperates with the telecom regulator during the SMP procedure in accordance with the cooperation agreement concluded between the GVH and the telecom regulator. As regards the agricultural sector, the GVH asks the opinion of the minister responsible for agricultural policy whether the conditions for exemption are met (see above).

May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.

No.

Does the law allow non-competition aims to be considered when your agency takes decisions?

No.

Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?

As for the review of competition cases, an administrative system of judicial review exists in Hungary. As at 1 January 2018, there are two instances of court review for competition cases, the first instance court is the Budapest-Capital Regional Court of Appeal, which possesses exclusive competence in competition law matters, while the second instance court is the Hungarian Supreme Court, the Curia, which is the presiding appellate court. Before the entry into force of the Code of Administrative Litigation (Act I of 2017 on the Code of Administrative Litigation), the Curia acted as an extraordinary review court in competition cases. However, in accordance with the legislation that is currently in force, the Curia is the appellate court for the review of the GVH’s decision on the merits of the cases.

Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances.

Since the establishment of the GVH in 1991, it has blocked six mergers, the most recent case is the merger between Magyar RTL Televízió Zrt. and Central Digitális Média Kft. (Case No. VJ-87/2016.) (See press release https://www.gvh.hu/en/press_room/press_releases/press_releases_2017/the_gvh_did_not_authorise_the_acquisition_of_centr) On 9 December 2019, the Hungarian Supreme Court (Curia) annulled the prohibition decision and ordered the GVH to conduct a new investigation.

Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.

Yes. In 2019, the GVH conditionally cleared the acquisition of control of MOL Kiskereskedelmi Ingatlan Kft. and MOL Nyrt. (MOL) over petrol stations of Mobil Petrol in five locations (Pécs, Gödöllő, Fülöpszállás, Jászberény-Jászjákóhalma and Mezőkovácsháza) (Case No. VJ/46/2018.). The GVH ordered a full investigation (phase II) to assess the potential harmful effects of the acquisition, during which it obtained data from more than 50 market players and carried out on-site inspections. The GVH found that the transaction would raise competition concerns only in one out of the five locations concerned, in Mezőkovácsháza, where both petrol stations would belong to MOL, which might lead to an increase in retail price. The investigation also revealed that MOL sets the uniform framework conditions for its retail pricing nationwide, although the prices applied by each petrol station may differ from the national reference prices. In view of the competition concerns, MOL undertook not to deviate significantly from its national reference prices for certain fuel types (‘diesel’ and ‘95’) in case of its petrol stations located in Mezőkovácsháza. This commitment means, on average, a decrease of approx. HUF 5-7/litre in the location concerned. According to the GVH's assessment, the commitment adequately remedies the identified competition problem for the next five years; consequently, the GVH authorised the transaction. The GVH will monitor the compliance with the decision in the framework of a follow-up investigation.

Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.

Yes, in 2019, the GVH conducted four Phase II merger investigations. In one of these four cases the authorisation was granted subject to commitments aimed at eliminating the harmful competitive effects of the concentration (see above, Case No. VJ/46/2018.). None of the remaining three concentrations raised competition concerns and were therefore cleared by the GVH.

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.

Yes, in a number of cartel cases the GVH has pursued companies based outside of Hungary. In 2020, SATRK GmbH (Lugeck 1-2, 1010 Wien, Austria) has been called into an ongoing proceeding (VJ/61/2017.).

Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?

Yes, the GVH operates a leniency programme. Applicants should contact the Cartel Detection Section by telephone on +36 1 472 8876, or by email [email protected]. If for any reason the undertaking requesting leniency is not eligible for full immunity but the conditions set out in the Hungarian Competition Act are met, then the following fine reductions may be granted; 30 to 50 per cent for the first undertaking, 20 to 30 per cent for the second and up to 20 per cent for the third.

Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?

The GVH applies the Hungarian Competition Act in the framework of an administrative procedure. It is the Penal (or Criminal) Code that contains criminal sanctions for cartel behaviour in public procurement and concession procedures. This provision of the Penal Code is enforced by the criminal authorities.

Are there any plans to reform the competition law?

Yes, there are plans to revise the law.

When did the last review of the law occur?

The last review has taken place with the transposition of Directive (EU) 2019/1 (ECN+), which will take effect from 1 January 2021.

Do you have a separate economics team? If so, please give details.

Yes. To improve the quality of economic analysis and increase the role of analytical work in the activities of the GVH, the Competition Economics and Market Research Section headed by the chief economist, as a separate body, is responsible for preparing thorough theoretical and, whenever possible, empirical economic analyses in individual competition supervision proceedings. The section operates under the direction of the vice president of the GVH and may also be involved in the enforcement of the tasks relating to competition advocacy and competition culture.

Has the authority conducted a dawn raid?

Yes, the GVH has carried out dawn raids on many occasions. In 2019, the GVH carried out dawn raids in 10 cases, which altogether concerned 27 companies. Since 15 January 2017, dawn raids can also be carried out in merger cases, if a reasonable suspicion exists that the transaction in question will be implemented in the absence of the GVH’s authorisation, or if the notification of the concentration conceals essential information or contains misleading information.

Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.

The GVH does not have the power to impose fines on individuals that are not undertakings.

What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?

Since 15 January 2017, major changes have been applicable to the pre-merger notification thresholds. A concentration must be notified to the GVH if:

  • the net sales revenue of all the groups of undertakings concerned and the net sales revenue of the undertakings controlled jointly by the groups of undertakings concerned and other undertakings exceeded 15 billion forints in the preceding business year; and
  • there are at least two groups of undertakings concerned whose total net sales revenue in the year preceding the merger, together with the net sales revenue of the undertakings controlled jointly by the undertakings concerned and other undertakings, exceeded 1 billion forints each.

According to the Act, only the Hungarian turnover, that is the domestic sales, can be taken into account when calculating the combined net sales revenues. Specific rules apply to the calculation of thresholds for mergers including insurance companies, credit institutions, financial enterprises or investment companies, which are largely in line with those set out in the EU’s Jurisdictional Notice.

In the case of a failure to notify, the GVH is empowered to open a proceeding ex officio only within six months after the execution of the merger and is not entitled to impose a fine for the lack of notification.

The legislative amendment also gave the GVH powers to investigate concentrations below the threshold limits if:

  • it is not obvious that the concentration will not significantly reduce competition in the relevant market, particularly as a result of the creation or strengthening of a dominant position in the market; and
  • the total net turnover of the undertakings concerned exceeded 5 billion forints in the previous business year.

Are there any restrictions on investments that involve less than a majority stake in the business?

According to the law currently applicable, non-controlling minority shareholdings are not covered by the merger control system in Hungary, with the result that the acquisition of a minority share that does not provide sole or joint control rights is not notifiable. However, due to the introduction of a secondary ‘merger investigation threshold’ as a result of the 2016 amendment of the Hungarian Competition Act (see above), a concentration must also be notified if:

  • it does not meet the jurisdictional notification thresholds;
  • the total net turnover of the undertakings concerned exceeded 5 billion forints in the previous business year; and
  • the concentration might significantly reduce competition on the relevant market, particularly as a result of the creation or strengthening of a dominant position in the market.

In addition, in notifiable cases the GVH can take into account the parties’ minority shareholdings (especially in companies on horizontally or vertically related markets) while assessing the theories of harm.

Hungary: from the enforcer's competition economists

Address: Alkotmány u 5., Budapest 1054, Hungary
H-1391, Budapest 62, PO Box 211, Hungary
Tel: +36 1 472 8900
Web: www.gvh.hu

Contacts

Mr Zombor Berezvai
Head of the Competition Economics and Market Research Section
Email: [email protected]
Tel: +36 1 472 8904

Ms Gabriella Szilágyi
Head of the International Section
Email: [email protected]
Tel: +36 1 472 8938

Questions and answers

How many economists do you employ?

The Hungarian Competition Authority (GVH) employs 14 economists. The total (non-administrative) staff is 82.

Do you have a separate economics unit, or ‘bureau’?

Yes, we have a separate unit/section for economic analysis, the Competition Economics and Market Research Section (formerly known as the Chief Economist’s Section), led by the chief economist. The section currently consists of a head of section, a deputy head and an economic analyst.

Do you have a chief economist?

Yes, as of 1 September 2019, Mr Zombor Berezvai was appointed as chief economist of the GVH. He obtained a degree in economics in 2015 from the Eötvös Lóránd University. He is a PhD candidate at Corvinus University of Budapest and he is also active in academia and publishes frequently in different scientific journals.

To whom does the chief economist report?

He reports directly to the vice president, Mr László Bak, who determines which projects and cases require the deeper involvement of the Competition Economics and Market Research Section.

Once assigned to a case, the contributions of the Competition Economics and Market Research Section are usually sent directly either to the case team or to the Competition Council (depending on the stage of the proceeding).

Does the chief economist have the power to hire his or her own staff?

The chief economist has limited power to hire his own staff.

How many economists have a PhD in industrial economics?

None. The chief economist is a PhD candidate (marketing and econometrics, Corvinus University of Budapest).

Does the agency include a specialist economist on every case team? If not, why not?

The Competition Economics and Market Research Section is involved mostly in more complex cases, which may require more sophisticated and robust economic and quantitative analysis. It is also regularly consulted in a broader range of cases about more general issues, such as theory of harm.

Also, since roughly a dozen staff members of the GVH are trained economists, the case teams often include an economist.

In consumer protection and cartel cases, economists are rarely involved.

Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances?

Partially. The Competition Economics and Market Research Section is professionally autonomous and, in this sense, it has an independent and unbiased voice within the GVH. At the same time, its work must be integrated into the investigations and the broader operational framework (eg, budget) of the GVH, which are managed by other parts of the organisation. In certain cases, the Competition Economics and Market Research Section must be consulted, while in others it is consulted on a case-by-case basis. Nevertheless, in all cases it is up to the management, the case handlers and the Competition Council to determine whether they find its advice or contributions relevant.

How much economics work is outsourced? What type of work is outsourced?

Occasionally, market research firms or experts are hired to conduct surveys that are then used as contributions to larger projects, significant cases and sector inquiries. Recently, Dr Ferenc Vissi – the first president of the GVH and a renowned competition economist with substantial experience in consulting – was hired to support the use of economics within the GVH.

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