Legal background
The abuse of significant market power is a special area regulated by the Hungarian Trade Act. Pursuant to Section 7 of the Trade Act the Hungarian Competition Authority (GVH) shall act in cases of abuse of suppliers by traders with significant market power by applying the provisions applicable to violations under Competition Act.
The Trade Act prohibits the abuse of significant market power against suppliers. Significant market power differs from the concept of dominant market position under the competition laws and is deemed to be established if the consolidated net revenues generated by a group from trading activities for the preceding year exceeds HUF 100 billion (approximately EUR 261 million) or if it enjoys or is likely to enjoy a one-sided bargaining position in connection with a supplier. Under the Trade Act, abusive practices include undue discrimination, unjustified contract modification, undue restriction of access to marketing channels, imposing unfair conditions, and applying unjustified charges.
These rules of the Trade Act cannot be invoked in relation to agricultural and food products, as a dedicated Act has been enacted for these cases, the enforcement of which falls under the competence of the National Food Chain Safety Office (NÉBIH).
In 2020, the Trade Act introduced new requirements for agreements between beverage manufacturers with significant market power and the HoReCa (hotels, restaurants, cafes) units they contract with. The violation of these rules falls under the jurisdiction of the GVH.
Retail chains in focus
In the recent years, the GVH has investigated several cases of abuse of significant market power, finding that big international retail chains (Spar and Auchan) had committed infringements. In case of Auchan, the GVH found in its investigation in 2015 that it had violated the Trade Act by requiring around three quarters of its suppliers of non-food products to pay a post-trade discount subsidy, regardless of turnover, in order to allow their products to be included in Auchan’s stock. The GVH investigations revealed that most of Spar’s non-food suppliers and several of Auchan’s had to pay a rebate at the end of the year, which was calculated as a percentage of the goods purchased by the retail chain that year.
The case reached the highest judicial body in Hungary – the Curia, which upheld the decision of the GVH, imposing a fine of HUF 1,61 billion, a record amount at the time. Spar had earlier been subject to similar investigations on several occasions: for example, in 2012 the GVH imposed a HUF 50 million fine on Spar for the ex-post supplier fee applied by the company between 2009 and 2011.
Spar fails to learn from the past: results in a package of measures amounting to HUF 1.7 billion
In its February 2025 statement, the GVH recalls that in December 2020, a new investigation started against Spar on suspicion of abuse of significant market power. In the process, the GVH concluded that the retail chain’s bonus scheme unilaterally and unjustifiably imposed fees on suppliers to get their products on the shelves of the store network. The GVH not only found an infringement, but also imposed a HUF 1.7 billion package of measures on the company as a result of the procedure, in respect of and without a fine.
As a result, Spar had to make a number of commitments, such as establishing six regional supply centres (Győr, Hódmezővásárhely, Nyíregyháza, Pécs, Székesfehérvár, Zalaegerszeg) to increase the sales opportunities for Hungarian small-scale local suppliers. Spar also committed that the regional scheme will provide 90% of opportunities for new micro, small and medium-sized suppliers. The commitments eventually included providing training to suppliers in quality auditing, logistics, warehousing and marketing. This package could have been quite beneficial for both Spar and its suppliers as Spar could avoid a fine, while suppliers could have job opportunities and other possibilities.
The implementation of the measures has enabled 100 new local small suppliers to benefit from sales opportunities and marketing support, and the proportion of new suppliers has exceeded the 90% minimum required by the commitment. In addition, Spar also created 23 new jobs linked to its regional supply centres. However, compliance was not full: the GVH found that Spar had not fully complied with its commitments for 2022 and 2023.
Takeaways
It is clear from the present case that the GVH is actively and thoroughly investigating the abuse of significant market power under the Hungarian law, and is ready to impose large fines or to order the implementation of substantial packages of measures. In addition, even if a package of measures is fulfilled, the GVH is actively investigating its proper execution. In the event of non-compliance or failure to provide proof, the GVH may impose significant fines on the businesses concerned.
May 2025
Máté Borbás
SBGK Attorneys at Law