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Hungary, 2009

Hungary, 2009. Development of competition law enforcement Tihamér Tóth White&Case of counsel Pázmány University, Competition Law Research Center. Statistics. Decisions adopted in 2009 Procedures started in 2010 more than 30 UCP cases, 1 cartel, 2 M&As. Statistics - fines.

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Hungary, 2009

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  1. Hungary, 2009 Development of competition law enforcementTihamér TóthWhite&Case of counselPázmány University, Competition Law Research Center

  2. Statistics • Decisions adopted in 2009 • Procedures started in 2010 • more than 30 UCP cases, 1 cartel, 2 M&As DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  3. Statistics - fines • Fines imposed in 41 UCP cases: 827 million HUF • L’Oreal Hungary Kft. – HUF 150 million (570 000 euro) • Beiersdorf Kft. – HUF 110 million • Penny Market Kft. – HUF 100 million • Fines imposed in 6 antitrust cases: 5 000 million HUF • Heves county road construction cartel – 3 000 million HUF • MIF agreement – 1 900 million HUF • Mitac Mio RPM – 103 million HUF • Bakers’ cartel – 76 million HUF • Strabag Zrt. – 1 700 million HUF (6,4 million euro) • EGUT Rt. – 1 200 million HUF • Visa, MasterCard – 470 million HUF each DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  4. The Heves county road construction cartel • „Business as usual” • Price cartel involving information sharing cartel • Strabag and EGUT (Colas) recividists • Small local whistleblower • Proofs: e-mails, diary and leniency statement • Single continuous anti-competitive action • All 3 companies found guilty even if in certain tenders the e-mails related to only 2 of them • Value of projects allocated – appr. HUF 1 billion, total fines up to HUF 3 billion • Suggests new fining policy? • The guideline on fines in antitrust cases was withdrawn DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  5. The MIF case (multilateral interchange fee) • „Fashionable” topic, economics of two-sided markets, EU Commission actions • Special features in the Hungarian case: • Uniform fees for both companies and debit/credit cards • Fees remained constant - market circumstances changed • Level of fees not clearly based upon cost calculation • Suspected MSC cartel before • Novel legal issues (both HU and EU law applied) • Restriction by aim • Responsibility of the card companies as „facilitators” • Problems not resolved • Unilateral actions by card companies • Is regulation the answer? DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  6. Rules and recommendations of trade associations • Food products code of ethics • Involving the associations of the whole supply chain • Protecting the HU market, restricting EU trade • Government support • Hot summer for the GVH, termination decision • Registration fee for advocats in Békés county • High enough to hinder entry + discrimination • Commitment decision • Price recommendation for dental technicans • also EU law, HUF 3 million fine DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  7. The Mitac Mio GPS RPM case • 2005-2006 RPM policy by both Mitac and its HU distributor (LCP Kft.) • Small deviations tolerated • Business modell based on quality of services • However, no clear arguments on efficiency grounds • Written agreement v. real life • E-mails • Also some horizontal effects • LCP Kft. competed with its sub-distributors • Small effects due to parallel trade • Fine imposed • CEE case? Still only HU competition law was applied DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  8. The Raiffeisen Bank commitment decision • Significant unilateral increase in the amount of the fee of early repayment of the housing loan • Higher exit costs • Bad for clients – exploitative effect • Bad for competitors – exclusionary effects • Dominance towards existing consumers? • Rules on unilateral amendment of the contract • preserve ‘profitability’ and ‘business strategy’ are sufficient grounds • Rules on informing clients about the change • Commitments accepted • Partial compensation to ex-clients • Allowing repayment at a reduced fee for a certain period of time • Extending the information period from 15 to 90 days DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  9. The application of the Trade Act • Act No CLXIV of 2005 • Aimed at protecting small (?) suppliers against powerful retailers • The Spar „commitment” case • General terms of supply contracts changed: • Informing suppliers within 5 working days if the company was fined and hence the compensation obligation becomes effective • If quality debates arise the cost of an expert will be paid by Spar if he was wrong • If the invoice is incorrect and therefore Spar is not able to pay it informs the supplier about that before the payment deadline expires • Since the commitments were implemented during the procedure, the Competition Council terminated the procedure DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

  10. Trends in Hungary • Unfair commercial practices (UCP Dir.) cases dominate the agenda • View cartel cases initiated in 2010 • New fining guidelines? • View M&A submissions this year • Abuse of dominance cases? • Uncertanties: • Change in government: change in economic and competition policy? • Term of president expires in October DEVELOPMENT OF COMPETITION LAW ENFORCEMENT – HUNGARY 2009

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