Quick Introduction to Competition Law in Hungary
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This is a introduction to competition law (Act LVII of 1996) in Hungary.
The Act LVII. of 1996 on the Prohibition of Unfair Market Practices and the Restriction of Competition (Competition Act) contains the main rules of competition law in Hungary. The Competition Act came into force on January 1 1997 and rather different from the former one.
The Competition Act shall be applied to the behaviour of all entities (both natural and legal persons) effected in Hungary. The antitrust chapters have extraterritorial effect.
The Competition Act consists of two main parts: the so-called law of unfair market practices and antitrust law.
The law of unfair market practices contains the regulations of unfair competition and of misleading of the consumers.
(1) Unfair competition
The Competition Act contains a general rule on the prohibition of competing in an unfair way, for example: harming the goodwill of a competitor, acquisition of business secrets, copying of the product of a competitor etc.
Ordinary courts deal with these issues. The court may oblige to discontinue the prohibited practice, to pay compensation, etc.
(a) The misleading of consumer and unfair influence of the consumers decision
This chapter contains a general rule on prohibition of unfair manipulation of consumers e.g. in connection with the product, the distribution procedure, etc.
The Competition Office is competent in such cases; its decisions may be challenged at court. The possible legal consequences are the following: obligation to discontinue the prohibited practice, fine, etc.
(2) Hungarian Antitrust Law consists of three parts: cartel-regulations, rules concerning the abuse of dominant position and concentrations.
(a) The cartel regulations are almost the same as those of the EU Article 81 of the consolidated version of the Treaty of Rome. Agreements and concerted practices among independent undertakings (or associations) are generally prohibited in case of restraining the competition. The practice of the Competition Office is consequent in defining agreements rather broadly; its interpretation is similar to that of the European Commission.
The Competition Act exemplifies the behaviours of restraining the competition, but these are examples only, and the Competition Office examines thoroughly all cases with the economic background thereof.
The Hungarian antitrust law, similar to that of the EU, grants individual and block exemptions. Petition for individual exemption cannot be filed with the Competition Office anymore. Some block exemptions are issued in a form of government decrees.
Agreements among undertakings having less than 10 % of the relevant market are exempted by law.
The Competition Office is competent in cartel cases. The possible legal consequences are: obligation to discontinue the prohibited practice, fine up to 10 % of the yearly total income of the undertaking, etc.
(b) Abuse of dominant position
The structure of this part of the Competition Act is similar to the others: there is a general prohibition and examples (restrictions of manufacture, distribution, use of unfair prices, refuse of concluding contracts etc.) This chapter was based on Article 82 of the consolidated version of the Treaty of Rome.
An undertaking is considered as being in dominant position if it can operate extensively in an independent manner from the other undertakings.
The Competition Office is competent in such cases. The possible legal consequences are: obligation to discontinue the prohibited practice, fine up to 10 % of the yearly total income of the undertaking, etc.
(c) Concentrations
Concentrations (merger, acquisition, acquisition of a part of an undertaking, acquisition of leadership, common control of an undertaking) can be executed in case of obtaining the permission of the Competition Office.
The permission is required if the total yearly net income of the respective undertakings is higher than HUF 10-billion (approx. EUR 43-million) and the income of two of them exceeds HUF 500-million (approx. EUR 2,150,000).
The Competition Act provides exemption for banks, insurance companies in case of temporary acquisition for less than one year. The concentration may be permitted if it does not create or strengthen dominant position restricting the competition.
The Competition Office is competent in concentration cases. Consequences of missing the permission: the whole transaction shall be qualified as null and void.
Budapest, October 2010
ABOUT THE AUTHOR: Dr. Ákos Süle
Süle is an IP law firm with commercial law practice in Budapest. Our team is carefully selected and consists of recognized professionals who - prior to joining Süle - have gained invaluable experience at leading domestic and international law firms. Having advised Fortune 500 companies, our team has developed and maintains a client focused business approach when we provide legal advice to business, and undertake general and complex commercial and corporate transactions and disputes in Hungary and in the European Community.
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More information about Sule Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The Competition Act shall be applied to the behaviour of all entities (both natural and legal persons) effected in Hungary. The antitrust chapters have extraterritorial effect.
The Competition Act consists of two main parts: the so-called law of unfair market practices and antitrust law.
The law of unfair market practices contains the regulations of unfair competition and of misleading of the consumers.
(1) Unfair competition
The Competition Act contains a general rule on the prohibition of competing in an unfair way, for example: harming the goodwill of a competitor, acquisition of business secrets, copying of the product of a competitor etc.
Ordinary courts deal with these issues. The court may oblige to discontinue the prohibited practice, to pay compensation, etc.
(a) The misleading of consumer and unfair influence of the consumers decision
This chapter contains a general rule on prohibition of unfair manipulation of consumers e.g. in connection with the product, the distribution procedure, etc.
The Competition Office is competent in such cases; its decisions may be challenged at court. The possible legal consequences are the following: obligation to discontinue the prohibited practice, fine, etc.
(2) Hungarian Antitrust Law consists of three parts: cartel-regulations, rules concerning the abuse of dominant position and concentrations.
(a) The cartel regulations are almost the same as those of the EU Article 81 of the consolidated version of the Treaty of Rome. Agreements and concerted practices among independent undertakings (or associations) are generally prohibited in case of restraining the competition. The practice of the Competition Office is consequent in defining agreements rather broadly; its interpretation is similar to that of the European Commission.
The Competition Act exemplifies the behaviours of restraining the competition, but these are examples only, and the Competition Office examines thoroughly all cases with the economic background thereof.
The Hungarian antitrust law, similar to that of the EU, grants individual and block exemptions. Petition for individual exemption cannot be filed with the Competition Office anymore. Some block exemptions are issued in a form of government decrees.
Agreements among undertakings having less than 10 % of the relevant market are exempted by law.
The Competition Office is competent in cartel cases. The possible legal consequences are: obligation to discontinue the prohibited practice, fine up to 10 % of the yearly total income of the undertaking, etc.
(b) Abuse of dominant position
The structure of this part of the Competition Act is similar to the others: there is a general prohibition and examples (restrictions of manufacture, distribution, use of unfair prices, refuse of concluding contracts etc.) This chapter was based on Article 82 of the consolidated version of the Treaty of Rome.
An undertaking is considered as being in dominant position if it can operate extensively in an independent manner from the other undertakings.
The Competition Office is competent in such cases. The possible legal consequences are: obligation to discontinue the prohibited practice, fine up to 10 % of the yearly total income of the undertaking, etc.
(c) Concentrations
Concentrations (merger, acquisition, acquisition of a part of an undertaking, acquisition of leadership, common control of an undertaking) can be executed in case of obtaining the permission of the Competition Office.
The permission is required if the total yearly net income of the respective undertakings is higher than HUF 10-billion (approx. EUR 43-million) and the income of two of them exceeds HUF 500-million (approx. EUR 2,150,000).
The Competition Act provides exemption for banks, insurance companies in case of temporary acquisition for less than one year. The concentration may be permitted if it does not create or strengthen dominant position restricting the competition.
The Competition Office is competent in concentration cases. Consequences of missing the permission: the whole transaction shall be qualified as null and void.
Budapest, October 2010
ABOUT THE AUTHOR: Dr. Ákos Süle
Süle is an IP law firm with commercial law practice in Budapest. Our team is carefully selected and consists of recognized professionals who - prior to joining Süle - have gained invaluable experience at leading domestic and international law firms. Having advised Fortune 500 companies, our team has developed and maintains a client focused business approach when we provide legal advice to business, and undertake general and complex commercial and corporate transactions and disputes in Hungary and in the European Community.
Copyright Sule Law Firm
More information about Sule Law Firm
View all articles published by Sule Law Firm
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
