Legislative changes in 2023
Many pivotal changes to the Hungarian Competition Act were adopted in 2023. These include the increase of the maximum fine from 10 % to 13 % of the worldwide net turnover of the group of undertakings in the last closed financial year, the introduction of the letter of formal notice, and numerous changes to Hungarian merger control proceedings, including new filing forms. In addition, the HCA has been empowered to enforce the Digital Markets Act in Hungary. For a more detailed summary see: https://www.schoenherr.eu/content/novelties-in-hungarian-competition-law-2023/
While the specific effects of these changes on enforcement trends are yet to be seen, we expect that the HCA will not shy away from using its new tools and powers in 2024.
Legislative changes in 2024
The HCA's tasks will expand further this year.
From January, the HCA will need to adhere to shorter deadlines in informal complaint proceedings. Complainants should be more widely informed by the HCA about the handling of the complaint. In 2023, the HCA received more than 1,300 informal complaints, a number that is expected to grow with the new changes.
The HCA will also enforce the Foreign Subsidies Regulation in close cooperation with the European Commission. At the European Commission's request, the HCA may launch targeted investigations into foreign state aids that can distort the EU market.
From March 2024, the HCA will have new powers to enforce unfair commercial practices against consumers. The HCA may order the removal of any electronic data (e.g. to make infringing websites unavailable) if this is necessary to prevent a risk of serious harm to consumers.
Combatting inflation: accelerated sectoral inquiries and price watch system
In recent years the HCA has been a forerunner in responding to inflation, conducting accelerated sector inquiries, focusing on sectors such as the food industry, construction and, most recently, online travel. The HCA has recommended significant changes to the rules applicable to online travel agents in Hungary. The new legislative proposal with the changes is already awaiting approval in the Hungarian Parliament, with new rules concerning the complete prohibition of price-parity clauses for online travel agents, as well as establishing a more effective complaint management mechanism to be set up by online travel agents. The new rules are expected to come into force in the second quarter of 2024, and the HCA will have an important role in enforcing them.
The HCA's novel approach to fighting inflation also includes setting up and operating an online price watch system in the food retail sector, whose operation will continue in 2024 with an increased scope of products.
In 2023, the HCA maintained a vigilant stance in public procurement proceedings, concluding an eight-year-long cartel investigation in the road construction and passenger transportation sectors. Similar scrutiny is expected in 2024 against violations of competition law concerning public procurements.
The food sector also appears to remain a priority for the Hungarian watchdog, including a pending investigation into the setting of minimum resale prices for soft drinks at large retail chains. Resale price infringements have continued to be on the HCA's radar in recent years.
2023 has again been an eventful year for consumer protection cases in the HCA's practice. The HCA has once again imposed higher fines in total in consumer protection cases in 2023 than in antitrust matters. For example, the statutory maximum fine was imposed for the illegal sale of disposable electronic cigarettes over the internet via Slovak online shops. The fine illustrates the HCA's practice of going after consumer protection infringements affecting young people, the elderly and other vulnerable groups of consumers.
At the end of 2023, the HCA closed a proceeding against TikTok in which it investigated whether the tech giant diligently informed consumers about the terms of its service, including the handling of consumer data. TikTok offered undertakings to align its practices with the law to avoid the establishment of the infringement and the fine, which the HCA accepted. The undertakings, such as the creation of a Data Privacy Centre or a 20 % limit on advertisements, will presumably have a global effect, going far beyond Hungary's borders.
This also marks the HCA's preference to closely monitor and not shy away from taking actions against tech giants, which could result in record-breaking fines in the coming years if infringements are established. There are pending proceeding against Viber, Microsoft and WizzAir, among others.
In 2024, the HCA will focus on the impact of AI on competition and consumer protection. The HCA launched a market analysis in January 2024 to better understand whether AI-based technology can pose a threat to fair competition and whether it can make consumers more vulnerable, especially in terms of personal data collection activities and misleading consumers. The result of the market analysis is expected to be published by mid-2024.
Outlook and focus
In 2024, we expect even faster clearance in merger control proceedings, a greater focus by the HCA on consumer protection, including on green claims and swift actions against tech giants. Additionally, we also expect more cartel investigations and sector inquiries, with AI aspects being on the HCA's radar. The HCA will also take active roles in enforcement related to the new EU regulations (e.g. DMA and FSR).
A proactive stance to competition compliance will again be essential for success on the Hungarian market in 2024.