Hungary: Amending the Competition Act: significant changes in place

The Hungarian Competition Authority (“GVH”) is very keen to keep Hungarian competition rules up-to-date and in line with market and stakeholder experience and expectations. As a result of a public consultation process last year, the merger control rules have been significantly revised. Further, changes were enacted to implement the EU's Digital Markets Act and gatekeeper rules, as well as to boost compliance.

These were addressed in the amendment act passed in December 2022 modifying the Act LVII of 1996 on the prohibition of unfair market practices and the restriction of competition (“Competition Act”). The changes take effect in two stages from 1 January 2023 and 1 February 2023.

I. Updating merger control rules

(a) New merger notification thresholds

The merger thresholds for triggering a notification obligation were significantly increased compared to the previous thresholds. Accordingly, the transaction must be notified to the GVH if:

•  the combined Hungarian net turnover of all parties (i.e. the acquirer or acquirers and the target) exceeds HUF 20 billion (previously HUF 15 billion) in the previous financial year; and
• the individual Hungarian net turnover of each of at least two parties exceeds HUF 1.5 billion (previously HUF 1 billion) in the previous financial year (“First Set of Thresholds”);

OR

• the concentration may lead to a significant lessening of competition on the relevant market and the combined Hungarian net turnover of all parties exceeds HUF 5 billion (“Second Set of Thresholds”).

The legislator expects that the new thresholds will lead to a 10-15% reduction in notifications and lighter administrative burden on businesses.

The Second Set of Thresholds remains the same, but the amendment affirms the GVH's current practice of voluntary filing for transactions reaching the Second Set of Thresholds. However, the GVH can investigate these transactions for six months post-closing if no notification is made.

(b) Fines for gun jumping and filing fees have risen

The maximum daily fine for gun jumping is increased by 50%, from HUF 200,000 to HUF 300,000.

The filing fee for Phase I proceedings rises from HUF 3 million to HUF 4 million (33% increase), and for Phase II proceedings from HUF 15 million to HUF 19 million (27% increase).

(c) The GVH’s new notice on relevant markets

The Budapest competition law team took part in the consultation on the notice concerning the list of affected relevant markets (“Notice”).

The legislator imposed a new requirement on the GVH: the GVH must annually publish on its website a list of the markets affected by concentrations that have been cleared by the authority with an official certificate (i.e., notification procedure closed by the GVH's acknowledgement of the concentration). Although the market definitions detailed in the Notice are non-binding, the Notice will be a valuable source of the GVH’s current case law. The first list is expected to be published at the end of January 2023.

II. Modifications in relation to Digital Markets Act

The amendment designates the GVH as the competent authority in Hungary to cooperate with the European Commission and national authorities of other Member States to enforce the Digital Markets Act (“DMA”), coming into force in May 2023.

It also empowers the GVH to request the European Commission to examine the concentration of gatekeepers based on information provided to the GVH and authorises the GVH to initiate competition control procedure to determine whether a gatekeeper complies with the obligations under the DMA.

III. A new tool for ensuring fair competition: GVH’s formal notice

The GVH may preventively inform businesses of suspected infringements without opening a competition control procedure in its formal notice, giving them 45 days (or 60 for small businesses) to respond.

The formal notice can help businesses review and modify their objectionable market behaviour and provide a flexible opportunity to voluntarily remedy suspected infringements. Responding to the notice is not obligatory, but rather recommended to avoid possible future competition control procedures and fines.

IV. Summary

The raised notification thresholds and clarity on merger control rules may ease the administrative burden for stakeholders. The Notice on the definition of relevant markets is also a valuable source on the GVH’s continuously evolving practice. The increased filing fees and fines for gun jumping seem to mirror the effect of current economic circumstances.

The DMA and national implementation rules provide for division of powers between the European Commission and the GVH regarding the conduct of gatekeepers in digital markets.

The GVH’s new tool of issuing a formal notice may prove to be an effective way for the GVH to communicate its concerns about suspected competition law infringements and a possibility for undertakings to avoid a formal competition supervision procedure by adjusting their practices.

For more information, please contact Dániel Arányi, Gábor Kutai or Rebeka Szopkó.

VISIT OUR COMPETITION & EU HOMEPAGE