Significant changes to Hungarian competition law: increased merger thresholds, refinement of powers, DMA enforcement

The Hungarian Parliament recently adopted a rather significant update to Act LVII of 1996 on the prohibition of unfair market practices and the restriction of competition (“Hungarian Competition Act”). The updates are, at a number of points, based on recommendations made by the Hungarian Competition Association (with DLA Piper’s antitrust group providing significant input). The amendments will generally enter into force on 1 January 2023 (with some exceptions for 1 February 2023). Below, we have collected some of the key changes for Hungarian and international businesses.

Increasing the merger thresholds

As of 1 January 2023, the undertakings concerned will have to notify a transaction under the “hard threshold” rules if

  • the parties’ aggregate turnover exceeded 20 billion HUF (previously: 15 billion HUF); and
  • each of at least two parties’ turnover exceeded 1,5 billion HUF (previously: 1 billion HUF) in Hungary in the previous business year.

These changes generally follow the recent inflationary trends in Hungary (the last increase of the “smaller”, HUF 1 billion threshold occurred in 2017) but also aim to reduce the administrative burden on companies (the reasoning to the amendment states that the lawmaker altogether expects a 10-15% reduction in the number of notifications).  As a result, parties may choose to reconsider whether the new/increased thresholds still apply to their proposed transaction.

Clarification on notifications based on the “soft threshold”

As a rule of thumb, unless the transaction meets the hard threshold, the parties do not have to notify it to the Hungarian Competition Authority (Gazdasági Versenyhivatal, “GVH”). However, a further, alternative “soft threshold” also applies to those instances where the “hard threshold” does not capture a transaction that may have anti-competitive effects.

Although this latter “soft threshold” remains unchanged (the parties’ aggregate turnover exceeded 5 billion HUF in Hungary in the previous business year), the amendment now clarifies that notifying a transaction under the soft threshold rule is not mandatory under law. As a result, the “soft threshold” system becomes a real voluntary notification regime, where it is indeed up to the parties to decide whether to notify or not (as there is clearly no sanction attached to closing without notification – as opposed to the “hard threshold”, where closing without clearance entail gun jumping).

At the same time, the rules applicable for the GVH’s subsequent investigatory powers remain unchanged: as a result, if the parties did not notify the transaction based on the “soft threshold”, the GVH may initiate a competition proceeding within six months from the transaction’s implementation and may order various measures to restore competition. 

Good faith merger notification to the GVH made possible: alignment with EU rules

In Hungary, merger notifications have only been possible after the parties have signed their merger agreement, factually acquired the relevant controlling interest or announced their public takeover bid.  Now, in line with the EU merger control regulations, the amendments allow parties to notify their transaction to the GVH where they can demonstrate their good faith intention of proceeding with the transaction. Although the precise meaning of this provision is to be developed, it will certainly allow greater flexibility to notify the GVH before the conclusion of their agreement (although parties have already enjoyed wide-ranging possibilities to discuss their proposed transaction with the GVH through the very effective informal guidance process).

Increasing administrative fees and fines for gun jumping

The GVH may impose a fine on the parties in case they implement a transaction before clearance from the GVH in case the above “hard thresholds” are met. The fine amount is calculated from the transaction’s implementation on a daily basis. As of 1 February 2023, the maximum daily fine amount will increase from 200,000 HUF to 300,000 HUF.

The administrative fee for the merger proceedings will also increase: the new figures are 4 million HUF (previously 3 million HUF) for the Phase I and 19 million HUF (previously 15 million HUF) for the Phase II proceedings. At the same time it is important that the fee for the “simplified” proceedings (1 million HUF, covering the vast majority of merger proceedings) remains unchanged.

Temporary control of investment funds and investment fund managers

Irrespective of the “hard” and “soft” thresholds, a temporary acquisition for the purpose of resale will not have to be notified in cases where investment funds and investment fund managers acquire assets or shares of another undertaking if the resale is carried out within a one-year period. The personal scope of this provision (that previously covered insurance holding companies, credit institutions, financial holding companies etc.) will thus now be expanded to investment funds and investment fund managers.

Formal notice – a new tool of the GVH

By way of a formal notice, the GVH may contact and inform an undertaking about the GVH’s concerns regarding the undertaking’s allegedly unlawful practices. The formal notice does not preclude the initiation of a competition supervision procedure, nor does it mean a finding of an infringement. Therefore, the undertaking may present reasons to justify its conduct or the steps to be taken in order to comply with competition laws.

To increase transparency and promote compliance, the GVH will publish information about the formal notices on its website annually, including the alleged infringement and the markets concerned. This can be a useful indicator in the future about the GVH’s enforcement priorities.

Expanding powers of the GVH in relation with the EU’s Digital Markets Act (“DMA”)

The DMA defines a series of obligations on so-called “gatekeepers” that are active in the online platform economy and capable of creating a bottleneck in the digital world. Gatekeepers that provide services such as online marketplaces, social network services, online search engines and certain messaging services will be scrutinized by the European Commission under the new DMA rules, which will enter into force in May 2023.

In Hungary, the GVH will now be the designated authority that cooperates with European Commission in the course of enforcing the DMA. In this framework, the GVH, among other powers, may itself initiate a competition proceedings if a gatekeeper fails to comply with the obligations laid down in the DMA and notify the European Commission about its findings.

If you have any questions, please do not hesitate to contact us!

Fejes Gábor

Gábor Fejes

Co-Head of Competition and Antitrust

Gábor Fejes

Gábor is the Co-Head of the Competition and Antitrust practice group at DLA Piper Hungary. He has significant experience in many areas of practice including European and Hungarian antitrust law, unfair commercial practices cases, unfair competition and IP related advice. He has particular expertise in handling complex merger control cases and large scale cartel investigations. He is a lecturer on Hungarian and European competition law as well as on Hungarian contracts and tort law, at the Law Faculties of both major Science Universities of Budapest: ELTE and PPKE. He is member of the board of the Public International Law and Conflicts of Law Section of Bibó István College of Law.
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marosi zoltán

Zoltán Marosi

Co-Head of Competition and Antitrust

Zoltán Marosi

Zoltán is the Co-Head of the Competition and Antitrust practice group at DLA Piper Hungary. His main area of expertise lies in Hungarian and EU antitrust law, consumer protection law and administrative litigation. He has published numerous articles and book excerpts in the fields of competition law, commercial law and European Union law. Zoltán is currently a lecturer of EU law and EU competition law at ELTE School of Law and the Bibó István College for Advanced Studies and serves as a member of the Hungarian committee of bar examiners.
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