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Hungarian Competition Authority withdraws two prior clearances this year because of incorrect information provided by the applicant

May 2017 – The Hungarian competition authority, the Gazdasági Versenyhivatal (“GVH”), has announced in a press release that it withdrew clearance granted for a transaction earlier this year because of the provision of incorrect data by the applicant. It also ordered a full investigation into the matter (Phase II) and imposed a procedural fine of HUF 75,850,000 (approx. EUR 245,000) on the applicant.

This is the second time this year that the GVH has withdrawn its clearance for a merger because of the provision of incorrect data. This is a striking increase, as the GVH has never adopted such a decision until 2017, although it has had the power to do so in the past. This sends a clear message that companies and counsel must focus more on the reliability and the presentation of data in Hungarian merger control procedures and also suggests that they should also be prepared for “dawn-raids” by the authority to check the accuracy of the data provided.

In the above case,[1] the GVH withdrew clearance granted for an international deal that was cleared in several EU Member States, including Germany, Austria and Hungary, and which also had to be notified to the authorities in the USA. Although the data supplied to the European competition authorities was consistent, the GVH received signals from the United States Federal Trade Commission (“FTC”), under the relevant “waiver of confidentiality”, that the applicant had provided different data to the FTC and the GVH relating to the following:

(i)  total worldwide turnover of an overlapping relevant market;

(ii)  the parties’ market shares on this relevant market;

(iii)  a possible narrower product market/segment; and

(iv)  the fact that one of the motives of the transaction was that the target was a key supplier to the acquirer.

The GVH focused on the failure to indicate the possible narrower market definition, accepting the applicant’s reasons for the other discrepancies. However, according to the GVH, the failure of the applicant to indicate on the notification form and also during the course of pre-notification discussions the possibility of an alternative, narrower market definition justified withdrawal of the clearance.

In addition, the GVH provided comprehensive guidance on how it interprets the statutory conditions applicable to such a withdrawal. According to its decision, these conditions are as follows:

  • a Court has not yet ruled on the clearance;
  • less than five years have elapsed since the delivery of the clearance;
  • it must be related to a fact that is material to the decision;
  • such a material fact was not disclosed or was provided in a misleading manner.

    A fact that is material to the decision

    The fulfilment of this condition does not require the assumption that an alternative decision would have been reached on the basis of the fact in question. It is sufficient if the given fact has a fundamental effect on the assessment of the merger or on the decision-making process and/or can significantly influence it. The decision in this regard refers to Section 30 (2) of the Competition Act, which lists those factors which the GVH has to take into consideration when assessing a merger, including, inter alia, the structure of and competition on the relevant market(s); the parties’ activities, market position and strategy; and the effect of the merger on suppliers, customers and consumers.

    This case shows that an alternative market definition or market shares (and data regarding the parties’ market position and market share) qualify as “material” data. In the first case in which the GVH withdrew its decision, the control over a party was considered as such a material fact.[2]

    Data was not disclosed or was disclosed in a misleading way

    It is the parties’ task to prepare the notification form in a way that enables the GVH to recognise that some facts are missing or are uncertain. Similarly, the parties should raise all questions and uncertainties during pre-notification discussions. The GVH may not be able to collect all the facts of the case if the parties have not disclosed all facts material to the assessment of the case or have submitted them in a misleading way.

    As a result of the above, the GVH was not in a position to assess all possible market definitions, including one under which the parties’ market share would have exceeded 20%, thus triggering a full review procedure (a “Phase II” investigation) under the relevant notice [in Hungarian language only]. Therefore, the GVH withdrew its clearance, ordered the full investigation (as a result of which the applicant had to pay significantly higher procedural fees), and also imposed a procedural fine on the applicant.

    The above shows the different tendencies in Hungarian merger control proceedings: on the one hand, clearance is now granted faster (sometimes in literally one working day[3]); on the other hand, the GVH is focusing more on the accuracy of data. This puts greater burden on the parties to a deal and requires much more attention from counsel preparing filings and engaging in pre-notification discussions with the authority. This increasing focus also suggests that the GVH may soon use its newly granted powers to conduct “dawn-raids” in merger control procedures to check the accuracy of data (and possibly also to investigate early implementation).

    For more information, please contact Péter Vörös, Partner and head of Competition & State Aid, Hungary, at


    [1] Vj/1/2017

    [2] Vj/14-8/2017

    [3] B/254/2017