Hungarian Competition Authority Research Articles

Unfair commercial practices towards consumers in the Hungarian food industry

Unfair commercial practices in the food industry can include actions and practices by traders or producers that mislead consumers about the true characteristics, quality, or price of products. For example, if a producer does not accurately and transparently list the composition of products, or if advertisements contain false or misleading information about products, or if inappropriate product quality is concealed, or if promised benefits of products are not realised, or if consumers are unfairly persuaded to purchase products. It is important to note that all traders and producers must comply with consumer protection rules. If any unfair commercial practices are observed, consumers can legitimately file a complaint with the Consumer Protection Authority or the Hungarian Competition Authority. Unfair commercial practices can be a serious problem for consumers as they mislead them about the true characteristics of products, making it difficult to make informed purchasing decisions. Therefore, it is important for consumers to be informed about the true composition and quality of products in order to avoid falling victim to unfair commercial practices. Through various legal cases, I demonstrate how important it is for consumers to be fully informed and aware of their rights. Additionally, I illustrate how investigating different complaints can have an impact on preventing unfair commercial practices.

Article: The Issue of Consumer Compensation Before Antitrust Authorities: Commitments, Cooperation and Competence: The Hungarian Experience

The compensation of consumers for damages stemming from a breach of EU competition law rules has been in the forefront of discussions in the last years. A recent important aspect of the debate is whether a mixing of public and private enforcement efforts could enhance the effectiveness of consumer compensation. In Hungary, consumer compensation for breach of another field of EU law (unfair commercial practices) has been championed by a public authority, the Hungarian Competition Authority, which has achieved significant results to the direct benefit of consumers in this respect. This paper reviews the authority’s recent practices, key decisions and main achievements in this area (including some earlier cases concerning antitrust) and then provides a detailed assessment of the corresponding advantages and disadvantages. The authors argue that some key achievements in Hungary in this respect are very well suited for further use in the development of consumer compensation in the field of antitrust law on both an EU and national level. public enforcement, private enforcement, antitrust, consumer protection, damages, EU, Hungary

Digitalization and consumer protection enforcement

The era of “new consumer protection” is marked by maximum harmonization rather minimum harmonization, (more) policy-based approach, legislation driven by the fast-emerging ecosystem of digital platforms, the strengthening of collective remedy and agency enforcement, and more cooperation between Member State regulatory bodies and EU Commission. All of the above phenomenae emphasize changing directions and methods of consumer protection enforcement: digital platforms present a unique set of issues that trigger different policy solutions, mostly based on the findings of behavioral economics. The practices of digital platforms usually affect consumers in more than one Member State, thus EU-wide cooperation is more likely to happen vis-à-vis digital platforms than other traders. Individual remedies against digital platforms – due to their immense size – result in little change. The European Consumer Protection Cooperation Network is highly likely to open cases with regards to digital platforms. In Hungarian law, EU-wide coordination complements an already existing rich practice of the Hungarian Competition Authority in the field of unfair commercial practices. In the future, where quite possibly, the number of cases against digital platforms will grow, the issue of cooperation will grow even more important.

A kereskedelmi szektor felvásárlásainak hatása a csődkockázat mértékére és a hatékonyságra

THE AIMS OF THE PAPER We associate M&A transactions with increasing market share, improved operational efficiency, and the ability to create value, but several foreign studies have shown the failure of M&A transactions, including an increase in the risk of bankruptcy. Every year, a significant number of companies go bankrupt in Hungary, in the non-recession period, as well. The aim of our primary analysis is to examine, how the acquisitions made in Hungary between 2008 and 2016 affected the riskiness of companies, especially regard to their bankruptcy risk. Our secondary goal is connected to the identification of the change accompanied by the financial indicators. METHODOLOGY In our work, we examine the cases implemented in the commercial sector by companies subject to licensing by the Hungarian Competition Authority, ie with annual net sales of more than HUF 500 million. Apart from the “outlier” cases, we examine all the cases. The impact of the acquisition is analyzed with 3 bankruptcy models. MOST IMPORTANT RESULTS Regarding the non-financial characteristics of the transactions, we found that acquisitions typically take place between competitors, which presupposes strong market competition. This is also supported by the geographical position of the companies: in addition to Budapest, the examined transactions were characterized by companies based in the Great Plain. According to our financial results, the acquisition did not result in any efficiency gains in a significant number of companies, and there was no decrease in the risk of bankruptcy for the examined cases. RECOMMENDATIONS The results of our research carried out in Hungarian companies confirm the research published in the international literature, according to which M&A transactions fail in large numbers, adverse effects occur after the transaction: The results of our work may overshadow the well-known benefits and expectations of acquisitions. Based on all this, we recommend the companies planning mergers and acquisitions to take the possible failure of the acquisition into consideration.

Merger Control in Hungary

The present study presents the findings of the most comprehensive research that has ever been conducted in relation to the 30-year-old Hungarian merger authorisation process that has been in place since the political transition in Hungary. The aim of the research is, in particular, to present to the wider professional public the development of the authorisation process for mergers (or concentrations) in Hungary, which started in the last decade, and the resulting public value returns that have been achieved. The most important results to emerge from the research are that – compared to 2010 data – the average procedure time for full-scale merger proceedings in 2020 was reduced by 62%, and the administrative time limit for simplified cases decreased by 82.5%. Furthermore, the research revealed that today one-third of the Hungarian Competition Authority’s market interventions in connection with mergers take a verbal/informal form. This study was conducted using the methodology of data processing and analysing that are at the disposal of the Hungarian Competition Authority.

A magyarországi fúziók és felvásárlások elemzési lehetőségeinek feltárása

The focus of this study is how to contribute to the preparation of databases and methods that are required to analyse corporate mergers and acquisitions (M&A) in Hungary, with special attention to the grouping of the most basic attributes of acquisitions. Based on the critique of the literature on M&A transactions, the synthesis of M&A concepts and the adaptation of practices abroad, the author proposes to group M&A cases into the following categories: corporate acquisitions, management acquisitions, asset acquisitions and mergers. He recommends this procedure as a starting point in finance, marketing and management research, in addition to legal research, in which the goal may be the outline of a case study or database analysis. The methodology in this article and the categories created are applied in the cases from Hungary, for which the author used two self-developed databases. His investigation covers a total of 864 transactions between 1997 and 2018 that were permitted by the Hungarian Competition Authority. The results indicate that management acquisitions and asset purchases nowadays dominate the domestic M&A market.

Abuse of Dominance in the Case-law of the Hungarian Competition Authority – a Historical Overview

This paper provides a historical overview of the case-law and practices applied by the Hungarian Competition Authority (HCA) in abuse of dominance cases. The paper is co-written by practitioners of complementing antitrust fields, which ensures that both legal and economic considerations are explored. The paper identifies the unique characteristics of Hungarian legislation and case-law and critically evaluates them in light of EU competition law and economics principles. We analyse (i) the reasons for the high number of exploitative cases before 2010, (ii) the general principles applied by the HCA in exclusionary cases, (iii) the cost allocation assessments in dominance cases, and (iv) the issue of significant market power of retailers. The general starting point is that, judging by the number of dominance investigations, there is less antitrust enforcement by the HCA in recent years. However, the article concludes that less enforcement does not mean weaker enforcement. In fact, the quality of dominance cases, considering both legal and economic aspects, has increased over time. This tendency has also led to higher legal certainty in Hungary, which is beneficial for market players. Stronger criticism is only formulated against the concept of significant market power of retailers.

Viselkedésgazdaságtan a fogyasztóvédelemben

THE AIMS OF THE PAPER Revealing unfair manipulation of consumer decisions and the related consumer protection regulations are important for understanding consumer behaviour. In the last decades, research findings of behavioural economics play a key role in shaping consumer policy. In our paper, we examine how results of behavioural economics could be applied in the practice of consumer protection. METHODOLOGY Based on case studies from the decisions of the Hungarian Competition Authority (GVH) connected to three types of products, we present examples of decision-making heuristics and look at how authorities resolved these practices and how they affected regulations. MOST IMPORTANT RESULTS We identified commercial practices taking advantage of decision-making mistakes (even if unintentionally), particularly in terms of quantity, delivery method and product attributes relevant in buying decision making process. In part, this might be traced back to the over- or under-regulation associated with certain groups of products. RECOMMANDATIONS The non-rational consumer behaviour patterns explored by behavioural economics both implicitly and explicitly appear in consumer protection legislation and practices. Therefore, they may serve as a solid basis not only for law enforcement but for legislation as well. We also aim to highlight the importance of consumer protection regulation studies in marketing education. In addition, we argue that the analysis of our cases could be useful for marketing professionals. Profound knowledge of regulation is a key aspect for the corporate side, and consumer protection helps to make better decisions on the demand side.

What argumentation theory can teach us about commercials: Strategic maneuvering and the ‘tulip test’

The paper seeks to show that the theory of strategic maneuvering, the most recent version of the pragma-dialectical approach to argumentation, can make vital contribution to understanding how commercials are designed and defended against legal challenges. If commercials can be subjected to argumentation-theoretic analysis, that would also show that the idea that commercials never constitute genuine arguments is mistaken. We will begin by sketching the pragma-dialectical approach and the theory of strategic maneuvering, then we apply the latter to two cases: the argument in a commercial aiming to persuade customers that Dove Intensive Cream moisturizes better than Nivea’s similar product, and the argument given by Dove’s manufacturer, Unilever, during the proceedings conducted by the Hungarian Competition Authority, which is intended to convince the Authority that the commercial is not deceptive.

Hungary ∙ Refusal to Supply Pharmaceutical Wholesalers: The Hungarian Competition Authority Provides Guidance on DTP and RWA Models

Hungary ∙ Refusal to Supply Pharmaceutical Wholesalers: The Hungarian Competition Authority Provides Guidance on DTP and RWA Models

Content and drivers of performance management in agency-type organizations of the hungarian public administration

The improving performance of public administration and the reform of public financing system have been on agenda in Hungary for many years, in accordance with the international trends. However, governments have not expected and supported creating of a performance-oriented public administration in a comprehensive and explicit way. Nevertheless, there are bottom-up initiatives at organizational level, which target performance-oriented organizational function. The research focuses on organizations of central public administration where the successful application of performance management methods is most likely based on the international literature. These are the so called agency-type organizations, which are in Hungary called autonomous state-administration organizations independent of the Government (e.g. Hungarian Competition Authority), government bureaus (e.g. Hungarian Central Statistical Office), and central offices subordinated to the government (either the cabinet or a ministry) (e.g. Hungarian Meteorological Service). The studied agencies are legally independent organizations with managerial autonomy based on public law. The purpose of this study is to get an overview on organizational level performance management tools applied by Hungarian agencies, and to reveal the reasons and drivers of the application of these tools. The empirical research is based on a mixed methods approach which combines both quantitative methods and qualitative procedures. The first – quantitative – phase of the author’s research was content analysis of homepages of the studied organizations. As a results she got information about all agencies and their practice related to some performance management tools. The second – qualitative – phase was based on semi-structured face-to-face interviews with some senior managers of agencies. The author selected the interviewees based on the results of the first phase, the relatively strong performance orientation was an important selection criteria.

Recent Competition Policy Developments in Hungary Merger Control

One of the most significant enforcement tasks of the Hungarian Competition Authority (hereafter, GVH) is the control of concentrations. Undertakings are legally obliged to receive clearance for their transactions from the competition authority if the notified operation meets the turnover thresholds set out in the Hungarian Competition Act.This article gives a short overview of the most significant procedural and case-law improvements that took place in the GVH’s practice in 2012.

Antitrust Cases in the Financial Services Sector - An Overview of Seminal Hungarian and EU Cases

Article 101 TFEU and Tpvt. 11. § prohibit anti-competitive agreements, concerted practices and decisions of associations of undertakings if they aim or have the effect to restrict, distort or eliminate competition. Our paper, co-written with Botond Horvath, gives an overview of the most important decisions adopted by the EU Commission and the Hungarian Competition Authority of the past five years in Hungary and the EU. After the case summaries we present a brief analysis discussing topics like information exchange, two sided markets, the difference between by object and by effect restrictions of competition.

A magyarországi fúziók és felvásárlások térbeli jellemzőinek vizsgálata az 1997 és 2013 közötti időszakban

A tanulmány célja a Magyarországon az 1997 és 2013 között létrejött fúziók és felvásárlások (M&A, mergers and acquisitions) térbeli jellemzőinek és összefüggéseinek a vizsgálata. Az elemzés során 730 M&A-tranzakciót vettem górcső alá, amelyhez a Gazdasági Versenyhivatal versenyjogi határozatai adtak kiindulási alapot. Vizsgáltam a magyarországi M&A-tranzakciók térbeli sajátosságai mellett az ágazati és a pénzügyi (felvásárolt részesedések) jellemzőit és a közöttük levő összefüggéseket is.A tanulmány három egységből épül fel. Az első rész a szakirodalmi áttekintés, a második részben bemutatom a vizsgálatok során alkalmazott módszertant és a kapott eredményeket, a harmadik egységben az eredmények időbeli és térbeli összehasonlítására kerül sor.A vizsgált időszakban Magyarország kedvelt célpont volt a külföldi felvásárlók körében: a felvásárlók több mint 70%-a külföldi vállalat. Európai uniós országokban van a székhelye a külföldi vállalatok több mint 80%-ának. A felvásárló társaságok átlagosan 81%-os részesedést szereztek a céltársaságokban. A statisztikai vizsgálat eredményei azt mutatják, hogy a térbeli jellemzők (a felvásárló bázisországa és a külföldi leányvállalatok regionális eloszlása) nem voltak hatással a céltársaságban megvásárolt részesedésekre. A legtöbb M&A a feldolgozóiparban, a kereskedelemben és a logisztikai szektorban történt. A feldolgozóiparban a legtöbb M&A a Benelux államokból, Németországból és Olaszországból származik. A kereskedelmi szektorban kiemelkedő Németország (30%) és Franciaország (16%) jelenléte. A felvásárlások regionális megoszlása a területi egyenlőtlenségeket tovább erősítette Magyarországon.

Are Fines Fine? Sanctioning Infringements of the Directive on Unfair Commercial Practices in Hungary

This paper gives an overview about the legal background and the practice of the Hungarian Competition Authority as regards imposing monetary sanctions for misleading advertising and other types of unfair commercial practices. The sometimes unpredictable fluctuation of the level of fines is criticized. It is emphasized that the clear meaning of broadly worded legal prohibitions is essential before sanctions with the aim of deterrence are imposed. Consequently, in some cases where the infringement was not obvious, a less strict approach is advised, whereas for repeat infringers harming a wide range of consumers, personal, in some cases even criminal law liability should be the optimal sanction.

The Fall of Agricultural Cartel Enforcement in Hungary

The paper gives an overview of the recent developments in competition law enforcement in the agricultural sector in jurisdictions like the U.S., the EU and Hungary. I examine critically the new Hungarian law exempting domestic agricultural collusion from the cartel prohibition that raises the standard of living of farmers. The implications of the broad agricultural exception and the fine immunity can be chilling. It is a clear political message to the Hungarian Competition Authority that Parliament would like to see an end to some cartel investigations. The latest development is that the Hungarian Competition Authority has adopted its termination order in the melon cartel case on the 12th of April 2013. With reference to the provision hindering the imposition of fines, the authority stressed that for public interest reasons it has decided to terminate the lengthy and costly investigation.

Hungarian Experiences on the Role of the Competition Policy in a Transitional Economy

헝가리는 올해 공산주의로부터 시장경제로 평화적으로 전환된지 25주년을 맞이하였다. 또한 헝가리와 한국간의 국교수립 역시 올해로 25주년을 맞이하여 이 논문을 한국에서 출간하는 의미를 더해주고 있다. 경쟁정책은 전환기경제에서 독점적인 것은 아니지만 중요한 역할을 맡아왔다. 헝가리는 국가독점사업체들을 분해하여 민영화하는 과정에서 경쟁적인 시장환경을 창출 할 기회를 놓쳤으며, 이러한 상황은 헝가리 경쟁당국(GVH)이 심한갈등을 피하고 정치로부터의 독립성을유지하기 위해 민영화 과정에 대한 조사에 개입하지 않기로 결정함으로써 더욱 악화되었다. GVH는 체재전환을 위해서는 규칙의 변화 뿐 아니라 사고방식의 변화가 요구된다는 인식하에 전환기 초기에 소비자에 우호적인 경쟁법집행을 통해 그 평판과 경쟁에 대한 수용성을 높이고자 노력하였다. 그러나 형가리 국민들이 아직도 시장경제에 대해 매우 회의적이기 때문에 이러한 노력은 충분치 않았던 것으로 보인다. GVH는 업계의 경쟁법에 대한 인식이 매우 낮음을 알고 있었지만, 전환기 동안 카르텔 담당부서와 경쟁법 자율준수 캠페인의 부재로 통제경제의 담합관행을 극복 할 수 없었다. 전환기 경제의 경쟁당국은 카르텔을 적발하고, 정교한 조사를 실시하며, 업계의 경쟁에 대한 인식과 사회의 경쟁에 대한 수용성에 집중 할 수 있어야한다.

Hungarian Competition Policy as a Model-Child

Hungarian competition law substantially changed in the last 10 years. After a blooming period before the Second World War the Soviet influence as a matter of course prevented any idea of free and undistorted competition. After the regime change in 1989/1990, the former Price Regulator was transformed to the Hungarian competition authority (Gazdasagi Versenyhivatal, GVH). The first six years between 1990 and 1996 were used to develop and lay down the foundations of modern competition law. The new competition act in 1996 was than designed with an eye on the future accession of Hungary to the European Union.The enforcement of Hungarian competition law is recognised as flexible and usually both textual amendments of the competition act and changes in the decisional practice quickly respond to new developments on European level. Nevertheless, many interesting issues might be of interest to everybody. Just to name a few: in recent decisions dynamic competition is recognised as a driving force for competition, leading to long-term increase in consumer welfare; bid-rigging of public procurements is criminalised; private enforcement is directly recognised in the competition act; etc.

Judicial Review in Hungarian Competition Law -Tetra Laval Á La Hongroise

This paper assesses the degree of judicial scrutiny performed by administrative courts in Hungary when reviewing decisions by the Hungarian Competition Authority (Gazdasagi Versenyhivatal, ‘GVH’) in the light of the landmark ruling handed down by the European Court of Justice in Commission vs. Tetra Laval. The paper is divided into four parts. The first part provides an outline of the Hungarian Competition Act. The second part offers a brief overview of the general principles of judicial review of the Hungarian administrative authorities’ decisions. The third part examines whether the Tetra Laval ruling has influenced the judicial scrutiny applied by Hungarian courts. The fourth part concludes that although at first sight the Hungarian courts seem to draw little or no inspiration at all from the Community Courts’ case-law, a deeper analysis suggests that - irrespective of the developments in European jurisprudence - the Hungarian courts have in essence developed a finely tuned and restrained judicial review of the GVH decisions.The conclusions of this analysis point further than the Hungarian case and provides thoughts for the general discussion on the standard of judicial review of administrative authorities’ decisions.