Updates to the Hungarian Merger Control Regime
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Publications: 19 April 2022
Increased “hard” turnover thresholds
Hungarian merger control law has two sets of thresholds. If the parties meet the “hard” thresholds, this triggers a mandatory notification to the Hungarian Competition Authority (the HCA) and a standstill obligation. These thresholds will increase from 1 January 2023. Parties will have to notify, if:
- the combined domestic turnover of all the groups of participating undertakings exceeds HUF20 billion (up from HUF15bn) (approx. EUR49 million, up from approx. EUR 37m); and
- the domestic turnover of each of at least two of the groups of participating undertakings exceeds HUF1.5bn (up from HUF1bn) (approx. EUR3.7m, up from approx. EUR2.5m).
Shift to a voluntary notification system under the “soft” threshold
Starting from 1 January 2023, notification will no longer be mandatory if the parties do not meet the “hard” thresholds, but only meet the other set of “soft” threshold. The “soft” threshold has been designed to cover transactions that fall below the hard threshold but still create significant anti-competitive effects. There is no change to the threshold itself:
- the combined domestic turnover of all the groups of participating undertakings exceeds HUF5bn (approx. EUR12.3m); and
- it is not obvious that the transaction does not have anti-competitive effects.
There is also no change to the non-suspensory effect of the “soft” threshold, ie the parties are free to close the transaction without notifying the HCA or obtaining its approval.
The HCA will have powers to start an investigation into these transactions for six months after closing. With a voluntary notification, the parties can pre-empt such a post-closing investigation.
Updated temporary control rules
Under Hungarian merger control rules, acquisitions by certain types of financial and investment companies do not need to be notified, if they acquire control with the sole purpose of reselling the target undertaking within one year (similarly to Article 5(a) of the EU Merger Regulation). From 1 January 2023, the amendment adds private equity funds to the types of financial and investment companies that are eligible for this exemption.
Notification based on “good-faith decision”
After 1 January 2023, the parties will be able to notify a transaction if they can “demonstrate a good-faith decision to enter into the concentration”. Under the existing rules, the notification can be only filed at a later stage, once the parties have entered into a binding agreement (such as an SPA) or after the announcement of a pubic bid. This amendment introduces flexibility and will be welcomed by parties who work against tight transaction timelines. However, we can expect that it will take some time for the HCA to work out its practice as to what the authority will consider sufficient to show a “good-faith decision”.
From 1 February 2023, the notification fee payable if the HCA initiates an investigation upon the merger notification is increased by the amendment to HUF19m (ca. EUR47,000) from HUF15m (ca. EUR37,000) in case of Phase II proceedings and to HUF4 million (ca. EUR10,000) from HUF3million (ca. EUR7,400) in all other cases.
More flexible gun jumping fines
Starting from 1 February 2023, the amendment introduces flexibility to the daily fines imposed in case of gun jumping. The current daily minimum level is HUF50,000 (ca. EUR123) and the maximum level is HUF200,000 (ca. EUR493). The amendment abolishes the minimum level of the daily fine, which means that in less serious cases the HCA will not be required to impose a fine at all. The maximum level of the daily fine is increased to HUF300,000 (ca. EUR739).
Besides the above changes to the merger control regime, the amendment introduces rules to enable the HCA to play a role in relation to the enforcement of the EU’s Digital Markets Act.