The Hungarian block exemption regulations have recently been updated in order to reflect the latest developments in EU law.

Five out of six Hungarian block exemption regulations were significantly amended, namely those regarding the insurance, motor vehicles, professional services, research & development sectors and the vertical block exemption regulation, whilst the block exemption regulation on technology transfer remained unchanged. The updated government regulations in question are to be applied as of 22 October 2011.

As the block exemption regulation on vertical agreements may pursue a specific interest, a short summary of the updated regulation is presented as follows.

At first glance, the newly introduced 205/2011 (X.7.) Government Regulation on the Block Exemption of Certain Groups of Vertical Agreements (the "Government Regulation") appears to be a more structured and user-friendly piece of law. This is highly appreciated as it obviously envisages a better understanding and interpretation of its content.

As regards the provisions of the Government Regulation, – in line with the latest trends and developments in EU competition law – significant amendments were introduced with regard to the terms and conditions under which a vertical agreement may benefit from the block exemption.

The agreements concluded prior to the Government Regulation entering into force which complied with the provisions of the former vertical block exemption regulation can still benefit from the exemption for a term of one year.

The newsworthy provisions of the Government Regulation are:

  • The updated Government Regulation, with a view to ease its application, redefines the expressions used therein. Now, among others, it is to be noted that the newly adopted notion of vertical agreement expressly refers not only to agreements but also to concerted practices between market players of a different level in the value chain.
  • In order to benefit from the block exemption, the market share of the supplier nor the buyer may exceed 30% in the relevant market (previously only the market share of the supplier had to be considered).
  • If the party to a multilateral vertical agreement buys and sells the products/services from and to another party to the agreement, the market shares of such undertaking shall meet the market share requirements both as a buyer and as a supplier.
  • A grace period of 2 calendar years has been introduced which is applicable if the market share of any undertaking party to an exempted vertical agreement increases and exceeds the market share limit of 30%, but does not exceed 35%. Should the market share of the undertaking exceed 35%, the exemption may remain applicable for another calendar year. Nevertheless, the maximum term of the grace period is of 2 calendar years.

As a consequence of the above amendments, the Government Regulation, and thus the applicable Hungarian law, now fully complies with the Commission Regulation 330/2010/EU on the block exemption of vertical agreements.

Law: 205/2011 (X.7.) Government Regulation on the Block Exemption of Certain Groups of Vertical Agreements

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The original publication date for this article was 28/11/2011.