January 2023 – The Hungarian Competition Act (Act LVII of 1996 on the Prohibition of Unfair Market Conduct and Restriction of Competition) was amended effective 1 January. Below we provide a brief summary of the most significant changes.
Increased merger control thresholds
The Competition Act sets a dual turnover threshold to determine which transactions must be notified. These have all been increased, and from 1 January, only those concentrations must be notified where, in the last financial year for which a financial statement has been approved,
- the combined net turnover of all the groups of undertakings concerned (and their joint ventures, proportionately) exceeds HUF 20 billion (EUR 50 million) instead of HUF 15 billion (EUR 37.5 million), and
- the net turnover of at least two groups of undertakings concerned (and their joint ventures, proportionately) is above HUF 1.5 billion (EUR 3.75 million); this figure has increased from HUF 1 billion (EUR 2.5 million).
However, the threshold for voluntary notification has not been raised: such notification can still be made if it is not obvious that the concentration will not significantly reduce competition in the relevant market, provided the combined net turnover of all the groups of undertakings concerned in the previous financial year exceeds HUF 5 billion (EUR 12.5 million).
Date of merger control notification
A positive development in practice is that the amendment allows for the filing of a notification with proof of a bona fide decision to implement the transaction, so there is no need to wait for the signing of the agreement before filing. This may speed up the completion of transactions for the parties.
Certain amounts in the Hungarian Competition Act were also increased by the amendment effective 1 February 2023. Thus, the administrative service fee payable for full Phase II proceedings will increase from HUF 16 million (EUR 40,000) to HUF 19 million (EUR 47,500). The maximum daily amount of the fine that can be imposed in certain cases of unlawful implementation of concentrations will also increase from HUF 200,000 (EUR 500) to HUF 300,000 (EUR 750).
New "soft law" instrument
The President of the Hungarian Competition Authority ("HCA") has been empowered to send a letter of formal notice to companies, setting out his competition concerns regarding their conduct. This letter of formal notice does not constitute a finding of an infringement, it does not, of course, impose a sanction and does not preclude the opening of proceedings by the HCA at a later stage. The addressee may respond by setting out its views on the letter of formal notice to the HCA within a given time limit, and may even continue its conduct if it considers its behaviour lawful.
An important change in practice is that as a result of the amendment, it is no longer only possible to apply for a payment reduction in case of financial difficulties during a competition procedure, but also after the expiry of the deadline for payment of the fine imposed, but before the enforcement order is issued. However, in such case, it must be justified why such a request was not made earlier.
The Hungarian Competition Act has now been amended to allow the HCA to open competition proceedings to determine whether it considers that digital platform providers with significant market impact (gatekeepers) are complying with their obligations under the EU Digital Markets Act ("DMA"). The HCA will report the results of its investigation to the European Commission, which is responsible for enforcing the obligations.