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07 December 2017

Hungary Update (II): Amendments to the Competition Act

There have been quite a few developments in Hungarian competition law over the past weeks. While legislators have introduced further changes to the Competition Act, the Hungarian Competition Authority ("HCA") has also issued two landmark decisions, appointing its first trustee in a merger control case (see [please include hyperlink] for Update III) and assuming jurisdiction over a transaction where the parties' turnover was below the mandatory – but above the voluntary – merger control thresholds (see here for Update I).

Relevant new rules

Besides several purely procedural amendments, which are necessary to bring the Competition Act in line with the general administrative law framework, the following two changes stand out:

  1. New De-Minimis rules

Hungarian rules for exempting restrictive agreements from the cartel prohibition for lack of appreciable negative effects on competition will be brought in line with the EU De-Minimis Notice (OJ (2014/C 291/01): Going forward, agreements between competitors will escape the cartel prohibition if the parties to the agreement have an aggregate market share not exceeding 10 % on any relevant market. Agreements between non-competitors that are active on vertically related markets for the purpose of the respective agreement are exempted if the parties do not enjoy a market share of more than 15 % on any relevant market. In Line with the EU notice, agreements are not exempted irrespective of the market shares of the parties involved if the agreement in question contains certain hard-core restrictions. Under the "old" rules, agreements are exempt as long as the parties do not have an individual or aggregate share of more than 10 % in any relevant market.

  1. Significant increase of maximum fine for misleading information in merger control cases

Under the new rules, the maximum fine for providing misleading, incorrect or incomplete information in merger control proceedings will be increased from 1 % to 10 % of the implicated undertaking's net revenues in the year preceding the decision. A prerequisite for such a fine is that the omission/mistake on behalf of the undertaking is severe enough to warrant a withdrawal of the clearance decision. We note that the HCA seems inclined to withdraw clearance if it believes that the information under scrutiny could have been of relevance for the merger control proceeding, however the concept of "relevance" does not go as far as meaning a different outcome of the review. The Hungarian regime also deviates from other jurisdictions insofar as the most far-reaching consequence – withdrawal of the clearance – is only an intermediate step towards imposing a (potentially draconic) fine.

Effective date / limitation

Most of the amendments, including the two changes mentioned above, will enter into force on 1 January 2018. They will apply in those cases which are initiated following this date. The new maximum fine for misleading information in merger control proceedings will not only apply to clearances obtained after the effective date, but to any transgression as long as there are less than five years between the closing of the transaction and the opening of the infringement proceedings by the HCA.

The threat of such draconic fines for incorrect or incomplete information makes it all the more necessary for notifying parties to take utmost care when providing merger control filings. The HCA will certainly not shy away from imposing fines even in less problematic cases. It therefore seems that there is only one chance to provide a complete merger control filing containing all information requested in the HCA's filing form. This one chance should be taken very seriously.

further reading 

Hungarian Competition Authority assumes jurisdiction over a merger - the new investigative tool in action



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