Hungarian Competition Authority
Hungary
Abstract Shape Background
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

Csaba Balazs Rigo
Mr Csaba Balázs Rigó
President
 

Laszlo Bak
Mr László Bak
Vice President
 

Andras Toth
Mr András Tóth
Vice President and Chairman of the Competition Council

Attila Sipos
Mr Attila Sipos
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 2020 was 4,312.1 million Hungarian forints (€11.8 million), including the sum that can be used for the activities of the OECD-GVH Regional Centre for Competition in Budapest, which was 167.2 million forints last year.

How many staff are employed by the agency?

As of 1 January 2021, there are 125 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 of 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.

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/
archive/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.

The GVH opened the new investigation under case number VJ/8/2020. The proceeding, however, was terminated, because the GVH discovered that one of the parties opted out of the deal, consequently, the investigation became devoid of purpose.

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

Yes. -Between 2019-2020, the GVH, brought three decisions in which conditions were also imposed.

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 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 approximately 5–7 forints per 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.

Case No. VJ/42/2018. concerned the acquisition of control of DIGI Távközlési és Szolgáltató Kft. over Invitel Távközlési Zrt., two undertakings active in the telecommunications sector. As regards the conditions, in 15 towns/cities where the GVH identified competition-related issues, the GVH ordered DIGI to sell the acquired Invitel networks to the buyer appointed by the GVH and to assume additional behavioural commitments as well. Furthermore, in the towns/cities served by Invitel where the fixed-line TV service of the DIGI Group (provided by DIGI’s 100 per cent subsidiary called i-TV Zrt.) is also available, DIGI has to terminate its lease agreements concerning the networks until the end of 2023 and it also assumed an obligation related to the price of the fixed-line TV service for this period.

The second case where the GVH imposed conditions in 2020 was Case No. VJ/26/2020., which dealt with the acquisition of control over Csillag Csemege Kereskedelmi Kft. by the Portfolion Green Private Equity Fund, which is ultimately controlled by OTP Bank Nyrt. Csillag Csemege controls a group of undertakings which mainly manufactures the Nádudvari brand (which includes agricultural products such as various dairy and meat products) and is also active in crop and livestock production. Portfolion belongs to the OTP Group, which, while being active in several different industries, includes two smaller agricultural undertakings active in crop and raw milk production and cattle rearing. While the GVH did not identify competition issues related to the OTP Group and Csillag Csemege, the merger raised concerns related to coordinative effects. While the CEO of OTP Bank does not have controlling rights over OTP Bank, he does control another conglomerate active in the food industry (Csányi Group). OTP Bank therefore assumed an obligation to establish an internal structure (Chinese wall), which prevents the management of Csányi Group from obtaining confidential information. It is also worth noting that the parties proposed a viable commitment as soon as in the notification form, which significantly shortened the time needed to carry out the proceeding.

While they are not considered formal remedies, in some cases the GVH uses so-called ‘verbal interventions’ (when the case handlers informally signal the parties that competition concerns may arise, and the parties can modify the transaction, for example, by removing certain assets causing the competition problem to avoid the in-depth – or any – investigation) that also play a role in the GVH’s practice. In one of the cases, the parties withdrew from the transaction in the prenotification phase; in Case No. ÖB/8/2020. the product that would have raised competition concerns (marketing authorisation for medicinal products) was divested before the notification.

According to the GVH’s statistics, verbal interventions are becoming increasingly relevant in merger proceedings: the authority has used this tool twice since 2019 while – in contrast – there were three merger cases where remedies were imposed during this time.

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

Yes, in 2020, the GVH conducted three Phase II merger investigations. In one of these three cases, the proceeding was terminated in the investigative stage (see above, Case No. VJ/8/2020.). None of the remaining two 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 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 at [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 most recent large-scale amendment to the Competition Act was made in connection with the transposition of the provisions of Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (ECN+) into Hungarian law, which amendments are effective from 1 January 2021. These amendments concerned, inter alia:

  • procedural fines (the scope of conduct on which the fine is based and the maximum that can be imposed in the case of an association of undertakings);
  • information obtained during access to the file;
  • the use of covert evidence as evidence; and
  • the conditions under which unannounced inspection may be carried out.

In addition, a new chapter on cooperation has been added to the Competition Act, which provides for rules on mutual assistance between Member States.

Government Decree 406/2021 (VII. 8.) on the different application of Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices gave the GVH extended powers by allowing to conduct, besides the sectoral inquiries regulated in the Competition Act (section 43/E), accelerated sectoral inquiries, until 1 January 2022. The Government Decree does not amend the Competition Act but allows for its different application.

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 2021, the GVH carried out dawn raids in more than 10 cases, which altogether concerned more than 50 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?

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 article 24 of the Competition 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.

The GVH has the power 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.

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.

Pursuant to article 24/A of the Competition Act, the government may, in the public interest, in particular to preserve jobs and to assure the security of supply, declare a concentration of undertakings to be of strategic importance at the national level.  Such concentrations shall not be subject to an obligation of notification to the Hungarian Competition Authority pursuant to article 24.

The most recent amendments to the Competition Act, which entered into force in 2020 and 2021, introduced two further exemptions from notification.

Pursuant to article 25/A of the Competition Act, a merger realised by a financing transaction necessitated by the covid-19 pandemic involving a directly or indirectly majority state-owned venture capital fund or a private equity fund shall not be subject to a notification requirement whereby the venture capital fund or the private equity fund acquires, solely or jointly with other undertakings, right of control for investment protection purposes.

Moreover, pursuant to article 25/B, mergers involving a directly or indirectly majority state-owned venture capital fund shall not be notified if such venture capital fund acquires joint controlling rights via a state-subsidised capital investment, which has been deemed to be compatible with the internal market by the European Commission, in an undertaking whose net revenue in the previous year did not exceed 1 billion forints.

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.

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, PhD
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 19 economists.

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 two economic analysts.

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 his MA in Economics degree from Eötvös Lóránd University, and his PhD degree from Corvinus University of Budapest. 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?

Only the chief economist has a PhD degree in this field.

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 that require sophisticated and robust economic and quantitative analyses. 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 as 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 (for example, 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 used as inputs for larger projects, significant cases, and sector inquiries.

 

image 181

View all profiles

Get unlimited access to all Global Competition Review content