Hungary: Substantial Changes To The Hungarian Competition Act

Last Updated: 23 January 2017
Article by Martin Favart

On 6 December 2016, the Hungarian Parliament adopted substantial changes to the Hungarian Competition Act, which were published in Hungary's official journal on 15 December 2016 (the "Amendment"). With some exceptions, the new provisions will enter in force on 15 January 2017. The main changes include the following:

Merger control

Under the current regime, mergers must be notified to the Hungarian Competition Authority (the "GVH") if, in the preceding business year, the undertakings concerned achieved a combined turnover of more than HUF 15 billion (approximately € 50 million) and the turnovers of at least two of the groups concerned exceeded HUF 500 million (approximately € 1.6 million). The Amendment modifies this regime in the following ways:

First, the Amendment increases the above-mentioned HUF 500 million threshold to HUF 1 billion (approximately € 3.2 million), thus limiting the group of mergers that must be notified by virtue of meeting turnover thresholds.

Second, the Amendment creates a new regime for mergers that do not meet the HUF 15 billion and the new HUF 1 billion thresholds (see above) but still must be notified if

  • it is not obvious that the concentration does not significantly lessen competition on the relevant market, particularly by creating or strengthening a dominant position; and
  • the combined turnover of the groups concerned exceeded HUF 5 billion (approximately € 16 million).

The mergers falling under this new regime are not subject to any standstill obligation and the GVH may only investigate them for six months after the implementation of the concentration (whereas concentrations that must be notified for meeting the HUF 15 billion and HUF 1 billion thresholds may be investigated for five years).

While currently the thresholds for companies registered in Hungary is calculated on the basis of their worldwide turnovers, pursuant to the Amendment, such companies' thresholds will also be calculated on the basis of turnover achieved in Hungary only.

Importantly, in the future, pursuant to the Amendment, concentrations will first need to be notified to the GVH in a simplified form. Following that notification, the GVH will need to decide within 8 days whether to initiate an investigation, otherwise the concentration can be implemented. The administrative fee for such notifications will amount to HUF 1 million (approximately € 3,200).

While dawn raids are currently only available for the investigation of alleged abuses of a dominant position or restrictive agreements, pursuant to the Amendment, dawn raids will also be available in merger cases, for the investigation of gun jumping and the provision of incomplete or incorrect data.

Private enforcement

The Amendment transposes Directive 2014/104 on antitrust damages actions (the "Damages Directive"), resulting in a number of changes.

Previously, damages could not be collected from leniency applicants who received full immunity, unless the other cartel members were unable to pay. After the Amendment, leniency applicants will be liable for the damage caused to their own direct or indirect purchasers or suppliers.

The Amendment opens the way for the courts to order the disclosure of certain information based on a reasoned request subject to certain exceptions (e.g. privileged communication).

Pursuant to the Amendment, damages applicants will be able to benefit from a rebuttable presumption concerning the passing-on defence (i.e. the defendant will need to prove that the price increase has been passed on) and will continue to benefit from the ten-percent-presumption under Hungarian competition law (i.e. the defendant will need to prove that the price increase was less than 10%).

Leniency regime

Previously, leniency was available only for horizontal hard-core cartels. Following the Amendment, all agreements directly or indirectly aiming at the setting of prices, including vertical price-fixing, can be subject to leniency applications.

Settlement

Undertakings admitting the infringement in a settlement procedure were able to receive a 10% discount from fines. In order to make settlements more attractive, the Amendment increased the maximum level of the fine-reduction to the level of between 10% and 30%.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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