Hungary: Will New Amendments to "Minimize Bureaucracy" See Deadline for Phase 1 Merger Control Cases Cut to 8 Days?

07 January 2016 | newsletters

Summary proceedings in simple administrative cases

Pursuant to amendments of the Hungarian Act on General Rules of Administration implemented on 1 January 2016, an administrative authority -- including the Hungarian Competition Authority -- must issue a decision immediately, but at latest within 8 calendar days if:

  1. the facts of the case are fully clarified,
  2. there is no opposing party involved, and
  3. the generally governing legal framework provides a deadline under two months or sixty days.

The reasoning of the amendments provides that this so-called "summary procedure" shall constitute a main rule in administrative proceedings.

What does this mean for merger control cases?

Will the 8 days maximum introduced by the amendments really be the new deadline for Phase I merger control cases instead of the 30 days timeframe that such cases have had as deadline to date? Phase I merger control procedures definitely have the potential to qualify as summary procedures and thus receive clearance within the impressively short 8 days deadline (whereas a final decision in a Phase II proceeding, where the authority's deadline remains 4 months, is automatically excluded). However, in order to benefit from this tight deadline, the applicant must submit to the authority a merger filing that clarifies all facts and circumstances. In a recent press release, the Hungarian Competition Authority ("authority") highlighted that in order for it to issue a final decision within 8 days of filing, the filing must be complete, indicating that the fulfilment of the requirements largely depends on the applicants.

If the authority issues a data request or simply concludes that further investigation or data is required (including data which the applicant may not even be required or obliged to provide), it may order that the proceedings continue under the general 30 days deadline, even in Phase I merger control cases. The authority considers that the new summary proceeding will basically be used in cases that result in "simplified decisions", in which the authority does not include a detailed reasoning to the decision. Such decisions accounted for ca. one-third of the Hungarian merger control decisions in 2015. Therefore, the amendments do not mean that the shorter 8 day deadline has replaced the previously applicable 30 days deadline in all Phase I merger control cases; instead, they provide undertakings with a possibility to aim for shorter deadlines with their filing.

Increasing significance of pre-notification talks?

With the promise of a swift decision, pre-notification talks with the authority may take on greater importance. This is especially true for cases in which the applicants provide the authority with a draft filing, as the chances of a later data request are lower, ie there is a higher likelihood of issuing a decision within the framework of a summary proceeding. It has yet to be proven in practice how such tight deadlines will work in the cooperation between undertakings and the authority. In practice, such pre-notification talks may lengthen the preparation of the filing, but shorten the time for receiving clearance once the filing has been formally submitted.

Faster decisions in general?                                                                                                    

The shortening of the applicable deadline in case of summary procedures is part of the general efforts to make the Hungarian administrative procedures less bureaucratic and more client-oriented. The Hungarian Competition Authority has already taken steps towards this purpose, as a result of which the clearance decision in Phase I merger control decisions was generally issued within 20 days (without the time of an additional data request) in 2015. With the new amendments, it is hoped that this tendency will continue at a faster pace, ie merger control decisions are expected to be issued more quickly in Hungary, a development that would be especially welcome in multi-jurisdictional transactions.