In November 2022, the Hungarian Competition Authority ("GVH") launched a market analysis to examine the impact of environmental advertising claims (also known as green claims) on consumers. The market analysis will assess the actual content and consumer perception of green claims with a focus on food, clothing, household chemicals and cosmetics. The aim is to provide legislators with recommendations for the introduction of a uniform system of green claims and labelling, if found to be required. The market analysis fits into the recent trend of increasing scrutiny of green claims by the GVH.
False green claims distort competition
According to the GVH, the use of false green claims and labels may materially influence consumers' transactional decisions, thereby distorting fair competition. A significant proportion of consumers prefer products and services of companies which take environmental considerations into account. However, the Euromonitor survey in 2021 showed that more than half of consumers are sceptical about green claims and consider them to be unfounded. Consumer mistrust is a barrier to the market penetration of businesses that make a real effort to develop and provide more sustainable products and services.
The market analysis process
The market analysis will start with a so-called sweep, in which the GVH will identify which labels and claims businesses typically use in their current marketing activities. The GVH will then examine how consumers perceive these claims and labels, and finally make recommendations to Hungarian legislators on the factors that should be taken into account in designing a verifiable and credible system of claims and labelling for consumers.
The GVH is expected to issue request for information to companies making green claims. The publication of the findings for consultation is expected around summer 2023.
Summary
Businesses making environmental claims should be prepared for increased scrutiny by the GVH even outside the current market analysis, and should place a strong emphasis on following the relevant guidance of the GVH, where external advisors may come in handy.
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