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Fine imposed by the GVH concerning public procurements

According to the decision of the GVH, Finella Investment Kft. (the successor of HTD Szaknévsor Kiadó Kft.), JRM Produkció Kft., LIGA TV Kft. (LIGA TV), “PUPU Produkció” Filmgyártó Kft., and Nosztalgia-Design Kft. concerted their practices with the object of restricting competition in two public procurements launched by Médiaszolgáltatás-támogató és Vagyonkezelő Alap (Media Service Support and Asset Management Fund – MTVA). The GVH imposed a total fine of HUF 81,970,500 (approx. EUR 262,000) on the undertakings for the infringement.

On 2 November 2013, MTVA issued a call for tenders and subsequently conducted two open public procurement procedures under EU procedural rules, one concerning a ‘Framework Agreement on the rental of a HD television mobile broadcasting unit for the Media Service Support and Asset Management Fund for a period of 24 months with the occasional provision of human resources’ and one relating to a ‘Framework Agreement on the rental of a SD television mobile broadcasting unit for the Media Service Support and Asset Management Fund for a period of 24 months with the occasional provision of human resources’. The subject matter of the tenders concerned the rental of mobile broadcasting vehicles applying SD and HD technology. These broadcasting vehicles are used for local broadcasting in sport, cultural (concerts, theatre plays) and other events.

As regards to MTVA’s 2013 framework agreements, it was established by the GVH that LIGA TV had initiated the coordination that took place in relation to the bids submitted by the above-mentioned undertakings with respect to their form and content. The undertakings concerted their practices (i.e., decided to take part in the tender, drafted, submitted their bids and later completed any missing elements of the bid) in favour of LIGA TV, which would have been a subcontractor of all the other participants of the tenders of MTVA. The undertakings aimed to exclude competitors from the second round of the tenders, in which only the first four placed undertakings from the first round of each of the tenders would be able to participate. They intended to win the first four places in the first round. As a result, LIGA TV could have won contracts to execute the tasks defined by the framework agreements.

During the unannounced inspections at the premises of the undertakings, the GVH seized many pieces of evidence supporting the finding of an infringement, which included, among other things, the notes of the executive director of LIGA TV as a primary piece of evidence of the restrictive practice.

When establishing the basic amount of the fine, the GVH took into account three times the value of the tenders as the amount of the relevant turnover, and then it assessed the aggravating and mitigating circumstances.

When defining the amount of the fine, the GVH took into account – among other things, – the following factors:

  • coordination on the prices of bids in public procurement procedures amounts to one of the most severe competition law infringements with respect to not only the interests of the contracting authority but also society’s interests which are supposed to be realised by the public procurement;

  • the framework agreements were not implemented in the end and consequently did not have an actual effect on the market.

The GVH considered that LIGA TV played an active role as an instigator and organiser when conducting and coordinating infringing behaviours.

According to the decision of the GVH, it amounts to a severe restriction of competition, if in the first (qualification) round of a two-round public procurement procedure, a market participant undertakes to operate as a subcontractor to an extent of no more than 25% for tenderer undertakings which were previously not part of the market, but which could be personally linked by their directors to the subcontractor, and by this behaviour the subcontractor aims to exclude other market participants from the second (reopened tendering) round.

The GVH terminated the competition supervision proceeding against TVP Televíziós és videó műsorokat gyártó Kft.

Case number: Vj/11/2014.

Budapest, 9 May 2016

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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The GVH has initiated a proceeding for a suspected cartel

On 11 April 2016 the Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH)  initiated a competition supervision proceeding against several undertakings (Siemens Healthcare Kft., GE Hungary Ipari és Kereskedelmi Kft., PHILIPS Magyarország Kft., Variotrade Kft., HOGE Orvosi Műszer Kft., Premier G. Med Kft., Med&Trade Co. Bt., INNOMED MEDICAL Orvostechnikai Fejlesztő és Gyártó Zrt., Getronics Magyarország Informatikai és Kommunikációs Megoldások és Szolgáltatások Kft., PASCAL TEAM Kereskedelmi és Mérnöki Szolgáltató Kft., Silver Wood - IT Kereskedelmi és Szolgáltató Kft., MEDIMAT Kereskedelmi és Szolgáltató Kft., MEDI-CONT Kereskedelmi és Szolgáltató Kft., VMD Kórház Technológiai Zrt., Novelmedix Zrt., Artmed Kft., Euromedic Technology Kft., EUROMEDIC DENT Kft., Medirex Zrt., Mediszer Kórháztechnika és Kereskedelmi Kft. and Chemium Kereskedelmi, Szolgáltató és Gyártó Kft.). At the same time the GVH held unannounced raids at the premises of the undertakings.

The GVH noticed that since 2015, the undertakings under investigation have been presumably negotiating and sharing information with each other about the tender of identification number KEOP-5.6.0/E/15-2015 for “Supporting the procurement of health equipment aimed at saving energy” which was issued for the public procurement of diagnostic imaging equipment. The communications that took place between the undertakings were aimed at co-ordinating the undertakings’ conduct as tenderers in the public procurement, in particular in relation to deciding on the winning undertakings and the submitted prices on the tender.

By their conduct the undertakings have presumably violated the provisions of the Hungarian Competition Act and the Treaty on the Functioning of the European Union with regard to the prohibition of restrictive agreements.

According to the Hungarian Competition Act, the GVH may hold unannounced inspections on the premises of undertakings. The provisions of the Act require the GVH to obtain prior judicial consent before holding the inspections.

The initiation of the competition supervision proceeding does not mean that the undertakings in question have actually committed an infringement. The proceeding seeks to clarify the facts and to prove that the presumed infringement has been committed. According to the Act these proceedings must be closed within 6 months, however, this time limit can be extended two times by a further 6 months, depending on the complexity of the case.

Case number: Vj/19/2016.

Budapest, 12 April 2016

Hungarian Competition Authority

Further information:
Dr. Andrea BASA
Spokesperson
Mail: H-1054 Budapest, Alkotmány u. 5.
Tel: (+36-1) 472-8902
Email: basa.andrea@gvh.hu, press@gvh.hu
http://www.gvh.hu

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Hungarian success in the ICN-WBG Competition Advocacy contest

On 9 March 2016, the International Competition Network and the World Bank Group announced the winners and honorable mentions of their 2015-2016 Competition Advocacy Contest.  The Hungarian Competition Authority (GVH) was awarded an ‘Honorable Mention’ for its anonymous contact system, the Cartel Chat, which it introduced last year.

The contest, which aims to increase the role of competition authorities in the development of competition culture, was also organized last year by the World Bank Group and ICN. There were 43 entries in the contest spread over four themes.

The GVH won the honorable award in the category of “Catalyzing competition reforms through citizen and civil society engagement”.

The GVH attaches great importance to the fight against cartels as cartels have an extremely harmful impact on the development of the whole economy. What is deemed to be successful action as regards to the detection of cartels is “breaking the silence”, and detecting and obtaining decisive evidence. Competition authorities can obtain information on the most effective way of achieving the above from stakeholders themselves – one of the potential tools employed by the GVH for this goal is the leniency policy.

At the end of last year, the GVH launched a communication campaign to popularise the leniency policy with the following slogan “It cannot be kept secret”. As part of this campaign, the GVH introduced the new contact system for replying to questions about cartels.

Cartel Chat is a closed and protected system that assures persons (individuals and undertakings) who have information about secret cartels by a simple, anonymous registration that

1. they can share their special knowledge with the employees of the Cartel Detection Section of the GVH, in full anonymity and without fear of negative consequences or retaliation;

2. they can share information they have become aware of with the GVH even if the so called compliance programme in operation at the undertaking does not work or does not work properly;

3. they can ask any questions they want about cartels, the leniency policy and the procedure of the policy and about the informant reward;

4. in every case, they will receive answers from the same employee of the GVH who they have previously dealt with in the event that they have further questions.

More information about the contact system is available here (only in Hungarian).

The aims of the integrated communication campaign were to raise awareness, to incite activity and to forward basic information. In order to achieve the latter, the GVH has created its own microsite on http://kartell.gvh.hu/ (only in Hungarian).

Besides the activities of competition supervision and competition advocacy, the GVH is also responsible for the development of competition culture, in the framework of which it is responsible for disseminating general information on competition policy and promoting undertakings’ compliance with competition law. To fulfil this role, the GVH initiates communication campaigns aimed at inciting compliance with competition law and increasing the awareness of consumers.

Further information regarding the Advocacy Contest of the World Bank Group and ICN and its winners is available here.

Budapest, 10 March 2016

 Hungarian Competition Authority

Further information:
Dr. Andrea BASA
Spokesperson
Mail: H-1054 Budapest, Alkotmány u. 5.
Tel: (+36-1) 472-8902
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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MasterCard abused its dominant position

The Gazdasági Versenyhivatal (GVH – the Hungarian Competition Authority) established that MasterCard Europe SA (MasterCard) abused its dominant position through its exclusionary practice of not decreasing its interchange fees of its consumer debit cards issued in Hungary to the level of Visa's interchange fees. This behaviour took place from 8 February 2011 to 31 December 2013.

The European Commission (Commission), as the competition authority at European level, carried out several proceedings against card issuer companies relating to interchange fees. The interchange fee is the fee that a merchant's bank (the "acquiring bank") pays a customer's bank (the "issuing bank") for the acceptance of card based transactions. The level of which in Hungary is defined by the card issuer companies.

Because of the commitments offered by Visa and accepted by the European Commission, Visa faces an upper limit since 2011 on its interchange fees on domestic transactions made by consumer debit cards, while MasterCard faces no such limitation.

The credit and debit card market is a special market where the competition of card companies located in the upstream level of the market leads to an increase in interchange fees. The reason for this is that the card issuing banks receive an income from interchange fees and therefore they choose those card companies which are able to determine the extent of interchange fees at a higher level.

MasterCard was a dominant undertaking in the Hungarian debit card market in the relevant period and the upper limit placed on Visa’s ability to determine interchange fees strengthened even its position so that it had an unchallengeable competitive advantage vis-à-vis Visa.

MasterCard, aware of the above mentioned facts, determined the level of its interchange fees in a manner which further weakened the already weak competition resulting from MasterCard's dominant position in the market.

Consequently, the GVH concluded that MasterCard had abused its dominant position.

The GVH established the infringement and also imposed a fine on MasterCard. In determining the amount of the fine to be imposed, the GVH took into account 10 percent of the relevant income of MasterCard’s debit card turnover in the investigated period.

As a mitigating factor, when determining the amount of the fine, the GVH took into account the novelty of the infringing conduct of MasterCard, and consequently imposed a fine of 88 million HUF (approx. 284 thousand EUR).

Case number: Vj/46/2012.

Budapest, 1 February 2016

 

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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The GVH has imposed a fine of more than HUF 4 billion (EUR 13 million) for information cartel

The Hungarian Competition Authority (GVH) established in its decision that Magyar Bankszövetség (Hungarian Banking Association) – with the collaboration of Nemzetközi Bankárképző Központ Zrt. (International Training Centre for Bankers Ltd.) – had been operating the so called “BankAdat” database for 12 years in a way that was likely to restrict competition, as it had made it possible for the banks to share private, confidential and strategic data with each other. The GVH imposed a total fine of HUF 4.015 billion (approx. EUR 13 million) for the infringement.

According to the decision of the GVH, the information flow that took place in the operation of the BankAdat database amounted to horizontal information exchange, thereby infringing the competition law of both Hungary and the European Union.

The private, confidential and strategic data (e.g. data relating to quantities, costs, demand, profit) which was shared in the database by the members of Bankszövetség, ensured that the banks obtained up-to-date information about the market, market processes, efficiency, business policies and strategies of competitors. The concerned banks particularly used the available information for making business plans, creating strategies and for product development.

The GVH imposed a fine of HUF 4 billion (EUR 13 million) on Bankszövetség and HUF 15 million (EUR 50000) on Bankárképző.

When setting the fine, in the case of Bankszövetség the GVH regarded as a basis the sum of the interest, fee and commission incomes of the members providing the data in their reporting period from 2001 which incomes were realised as relevant market turnover on the retail and business segment; while in the case of Bankárképző the GVH considered as relevant turnover the turnover realised in relation to the operation of the database.

When establishing the sum of the fine, the GVH regarded as aggravating circumstances – among others – the following:

  • the uncovered information exchange led to an exceptionally wide range of data sharing and it also affected competition in the dimensions of price, quality and innovation;

  • the undertakings participating in BankAdat covered the domestic bank system almost entirely; their collective market share exceeded 80%.

The GVH took into account as a mitigating factor the following:

  • Bankszövetség and Bankárképző voluntarily abandoned the operation of the database after the initiation of the supervision proceeding;

  • the database is only partially unlawful.

Bankszövetség was an active member of the information cartel while Bankárképző played the role of a contributor. The GVH did not establish the direct responsibility of the member banks that provided data, because the decisions on the establishment and operation of the database were made by Bankszövetség itself. In its decision, the GVH specified the financial institutions that bear subsidiary liability responsibles (Budapest Bank, CIB, Erste, K&H, MKB, OTP, Raiffeisen, UniCredit, Magnetissimo, Banif, Commerzbank, Quaestor, FHB Kereskedelmi Bank, Gránit, KDB, Cetelem, Takarékbank, Sberbank, Merkantil, Porsche, Sopron Bank, Erste Lakástakarék, FHB Jelzálogbank, Fundamenta, OTP Jelzálogbank, OTP Lakástakarék, UniCredit Jelzálogbank, Axa, BNP, Citibank, Crédit Agricole, Deutsche Bank, ING), against which the recovery of the fine imposed can be arranged if the enforcement against the Bankszövetség cannot be realised.

The GVH accepted Bankszövetség's request to be allowed to pay the fine in instalments due to the fact that the membership fee revenues do not cover the fine; it shall therefore require its members to supply additional capital or it shall raise its membership fees.

The GVH terminated the procedure

  • with regards to the aggregated data that can be obtained from the BankAdat database, and

  • initiated against Kinizsi Bank, KELER, Exim Bank, Magyar Fejlesztési Bank and Mohácsi Takarék Bank.

Case number: Vj/08/2012

Budapest, 12 January 2016

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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