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The GVH imposed fines for coordination of bids in tenders of hospitals

In its decision the Gazdasági Versenyhivatal (Hungarian Competition Authority) established that, in order to influence the tender notice, share the market and fix prices, B. Braun Medical Magyarország Orvostechnológiai Kft., CHIRMAX HUNGARY Kereskedelmi Kft., Johnson & Johnson Egészségügyi és Babaápolási Termékeket Gyártó és Forgalmazó Kft., SurgiCare Kereskedelmi és Szolgáltató Kft. and VARIOMEDIC Kereskedelmi és Szolgáltató Kft. had coordinated their bids concerning four public procurement projects of hospitals. A total fine of 270 million HUF (approx. 843.800 EUR) was imposed on the undertakings for the infringement.

In the so-called “surgical catgut case” the GVH investigated tenders which were published by hospitals between 2011-2014 for procuring surgical sutures and surgical equipment. These products are medical devices which are used in hospitals for operations. The buyers of the undertakings under investigation distribute medical products and medical devices and their activities give them a combined decisive share of the domestic surgical sutures and surgical gown sewing machine market.

The case was initiated based on the leniency application of Johnson & Johnson Kft. in 2013. During its proceeding the GVH extended its investigation several times and all in all more than 30 public procurement actions were analysed to ascertain whether the bidders had coordinated their bids for supplying surgical products for tenders. The GVH found violations in the following four public procurement procedures:

  • planned procurement of surgical sutures for Zala County Hospital for 2011;

  • procurement of surgical sutures for Semmelweis University for 2012;

  • procurement of surgical sutures for the University of Pécs for 2012 and

  • procurement of surgical sutures for Petz Aladár County Educational Hospital for 2012.

The GVH imposed the following fines:

 

HUF

EUR (approx.)

B. Braun Medical Magyarország Orvostechnológiai Kft

100,973,619

315,540

CHIRMAX HUNGARY Kereskedelmi Kft

14,303,520

44,700

SurgiCare Kereskedelmi és Szolgáltató Kft

46,570,100

145,530

VARIOMEDIC Kereskedelmi és Szolgáltató Kft

106,481,060

332,750

Johnson & Johnson Kft. received full immunity from the imposition of a fine, thereby avoiding a fine of more than 115 million HUF (approx. 360 thousands EUR), due to the fact that the GVH became aware of the infringement through the leniency application of Johnson & Johnson Kft. In addition to Johnson & Johnson Kft, CHIRMAX HUNGARY Kft., and B. Braun Medical Hungary Medical Technology Co.Ltd. submitted leniency applications, and having regard to their active participation in enabling the cartel to be discovered, they received a 30 percent and a 20 percent reduction in their fines respectively.

In bid-rigging cases, the submission of a leniency application may be of significant importance as cooperation with the GVH not only affects the amount of the fine imposed in the competition supervision proceeding, but it may also put the employees of the undertaking that has submitted a leniency application in a significantly favourable situation in a potentially initiated criminal procedure.

When determining the fine, the GVH took into account as aggravating factors that bid-rigging amounts to one of the most serious competition law infringements and the fact that the undertakings are collectively significant market participants that must have been aware of the unlawfulness of their behaviour. The fine imposed on Surgicare Kft. was further increased because the role it played as the organiser in the cartel was established in connection with more infringements.

Case number: Vj/79/2013

Budapest, 5 August 2016

Hungarian Competition Authority

Further information for press:
dr. Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: ;
press@ gvh.hu

http://www.gvh.hu

Further information::
Customer Service, GVH
Tel: +36 1 4728851
Email: ugyfelszolgalat@gvh.hu
http://www.gvh.hu

 

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The GVH authorised the buyout of Pannon Lapok

After the Media Council of the National Media and Infocommunications Authority (NMHH) granted its administrative consent, the Hungarian Competition Authority (GVH) authorised Mediaworks Hungary Zrt. to acquire direct and sole control over Pannon Lapok Társasága Kiadói Kft.

On 4 July 2016 Mediaworks Hungary Zrt. submitted its application to the GVH for the authorisation of acquisition of its direct and sole control over Pannon Lapok Társasága Kiadói Kft.

Both groups of undertakings affected by the concentration are active in the publishing of printed and online press, the sale of advertising space, the distribution of printed media products, and also provide services related to coldset printing.

The investigation found that although both groups of undertakings are active in the publishing of county newspapers, they pursue their respective activities in different geographic markets; therefore there is no such territory in terms of the market of readers where their activities would overlap. When assessing the horizontal effects of the concentration, the GVH found that the two groups of undertakings provide advertising services relating to regional (county) newspapers in different territories and that the single county newspapers supplement, rather than substitute each other in terms of the different regional and local advertising target groups.

The possibility of detrimental horizontal effects only arose concerning the printing of newspapers using coldset technology (a process applied for the printing of newspapers and flyers) due to the market share of the groups of undertakings taken together. However, according to the resolution of the GVH the above-mentioned possible adverse horizontal effect on competition may be excluded after the authorisation of the transaction because 

  • there is significant spare capacity on the market and it can be expected that the demand on the market will continue to decline;

  • there are several significant competitors left in the market, therefore a switch to another service provider will not be greatly hindered;

  • those who purchase the services in question have buyer power;

  • the groups of undertakings are not close competitors;

  • foreign printing houses may be able to exert competitive pressure on the market;

  • the market players consulted did not raise substantive concerns in relation to the concentration.

The GVH also did not identify any detrimental or portfolio effects, considering that the concentration does not create a new vertical relationship and does not result in such an extension of the activities that would lead to detrimental portfolio effects.

Taking into consideration all these factors the GVH authorised the transaction.

Case number: Vj/58/2016.

Budapest, 3 August 2016

Hungarian Competition Authority

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

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Pick’s pricing practice is unlawful – The GVH has imposed a fine due to the fixing and setting of and minimum prices during temporary sales (promotions)

According to the decision of the Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH), from January 2009 to December 2014, Pick Szeged Szalámigyár és Húsüzem Zrt. (Pick) determined minimum resale prices when distributing meat products processed by Pick during temporary sales (promotions) in the framework of its marketing strategy. The GVH has imposed a fine of HUF 44,000,000 (approx. EUR 142,000) on Pick for the infringement.

Based on promotion agreements and on other direct evidence, the GVH established that Pick had set fixed and minimum wholesale and retail prices for products which were processed by Pick and sold by certain commercial partners (wholesalers and retailers) during certain promotional periods.

Pick was able to force the recommended consumer prices on its commercial partners by threatening them with delisting and the imposition of other sanctions. However, it did not apply these threats in practice.

Pick and its commercial partners (wholesalers and retailers) are undertakings on different levels in the production and distribution chain. Pick is a producer on the upstream level of the production chain, while its commercial partners are on the downstream wholesale and downstream retail level of the distribution chain. The agreements between Pick and its commercial partners amounted to vertical agreements.

Vertical agreements are agreements or concerted practices that are made between two or more undertakings that are on different levels in the production and distribution chain, for the buying, selling or reselling of certain products or services between the parties. The defining characteristic of a vertical agreement is that the parties clearly express their consent; this means that the concerned undertaking was not acting unilaterally.

In connection with the case, the GVH emphasised that it infringes competition law if a producer attaches certain conditions (e.g. relating to selling prices or quantity of goods) to the recommended consumer prices of its products and the acceptance of these prices during promotions set up by its commercial partners, and if it makes vertical agreements to achieve the performance of these terms. During the investigation, the GVH established that the agreements aimed to restrict competition, which was further supported by the motive of the parties. Pick was interested in making its brand image more attractive by forcing its commercial partners to sell its products for higher prices than those of its competitors. Pick’s commercial partners were interested in excluding those competitors that were able to sell Pick-products cheaper than themselves.

When determining the basic amount of the fine, the GVH took into account the net sales revenues coming from the agreements on certain promotions. As relevant turnover, the GVH only took into account those agreements that were clearly made in order to bilaterally and mutually determine the minimum level of the consumer price.

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

  • wholesale and retail price fixing amounts to a serious competition law infringement,

  • due to its leading market role, Pick’s behaviour may influence the behaviour and pricing practice of other undertakings operating on the market.

The GVH took into consideration, as mitigating factors, that

  • the actual existence and effects of the unified minimum prices recommended by Pick were not clearly ascertained by the price analyses made on the basis of publicly available data,

  • Pick has explicitly admitted the infringement.

The GVH terminated the proceeding

  • in connection with the setting of a non-reduced, normal price for processed meat products distributed by Pick and the setting of a fixed price for Familia products,

  • against FOCUS Hungary Marketing Piackutató és Tanácsadó Kft. and GFK Hungária Piackutató Kft.

Case number: Vj/37/2014

Budapest, 2 August 2016

Hungarian Competition Authority

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

Further information:
Customer Service, GVH
Tel: +36 1 4728851
Email: ugyfelszolgalat@gvh.hu
http://www.gvh.hu

 

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The GVH imposed a fine due to price-fixing, market allocation and information exchange on the market of waste management – first successful settlement

According to the decision of the Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH), ALCUFER Ipari Kereskedelmi és Szolgáltató Kft. (Alcufer), FE-GROUP INVEST VagyonkezelÅ‘, Tanács adó és Nagykereskedelmi Zrt. (Fe-Group) and JÁSZ-PLASZTIK Kft. (Jász-Plasztik) had carried out discussions having an anti-competitive objective from 26 June 2013 until 27 March 2014 relating to prices (fixing purchase prices), geographical areas (allocation of the relevant market) and strategic data (the exchange of data among each other). The GVH imposed a total fine of HUF 112,520,000 (approx. EUR 360,000) on the undertakings for the infringement.

Through its investigation, the GVH revealed that Alcufer, Fe-Group and Jász-Plasztik had participated in discussions aimed at the creation of a consortium agreement on the collection of lead-acid batteries. The agreement was due to become operative on the opening up of a battery processing plant in Jászberény.

  1. The three undertakings under investigation incorporated the details of their discussions into a consortium agreement. According to the contract, the three undertakings agreed on the allocation of the collection market for lead-acid batteries; Alcufer and Fe-Group undertook that they would sell all or at least a large amount of the lead-acid batteries collected by them to Jász-Plasztik, which was building a battery processing plant in Jászberény.

  2. According to the discussions, Jász-Plasztik had guaranteed to offer Alcufer and Fe-Group a favourable purchase price (by giving up a percentage of its savings stemming from transportation costs), while it had stated that it would offer a lower purchase price to undertakings which were not party to the agreement.

  3. The undertakings decided to exchange confidential and individualised quantity, pricing and shipping data in order to comply with and supervise the consortium agreement.

The existence of the single and comprehensive plan could be ascertained from the chain of authentic written and personal evidence found in relation to the agreement. The parties postponed the enactment of the consortium agreement on more than one occasion; in the end, the parties did not sign the agreement and did not apply its content. However, these factors do not change the fact that the parties intended to create a consortium agreement and do not prevent an infringement from being established.

When determining the basic amount of the fine in the case of Alcufer, Fe-Group and Jász-Plasztik, the GVH took into account the net sales revenues coming from the waste management activity relating to lead-acid batteries for the duration of the participation in the infringement on a time proportion basis as a relevant turnover. This turnover includes both Hungarian and foreign sales revenues coming from the sale of lead-acid batteries and revenues coming from collection fees.

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

  • cartels involving price fixing and market allocation amount to the most serious competition law infringement,
  • the undertakings are the most significant participants of the lead-acid batteries waste management market in Hungary,
  • the agreement eventually did not enter into force and therefore it did not have any actual market effect.

This was the first case in which the GVH invited an undertaking to indicate whether it was interested in engaging in the settlement procedure in order to bring about a quick and effective conclusion of the proceeding.

In the case, Fe-Group introduced its settlement submission in which it, among other things, voluntarily admitted the infringement. Consequently, the GVH reduced the fine imposed on Fe-Group by 10%.

According to the settlement procedure, the GVH reduces the fine to be imposed by 10% if the undertaking under investigation admits the infringement on the basis of the revealed evidence; moreover, it must also waive its rights to extensive access to files, to make a statement, to a hearing and to seek a legal remedy. This procedure facilitates the conclusion of the proceeding in a more rapid and less resource intensive manner. The settlement procedure may result in significant cost savings, not only for the competition authority but also for the undertaking. Additionally, the 10% fine reduction can be increased if the undertaking takes part in the leniency programme, which may result in a 50% reduction of the fine. More information regarding the settlement procedure is available here and other means of cooperation with the GVH is available here (available only in Hungarian).

Case number: Vj/2/2015

Budapest, 27 July 2016

Hungarian Competition Authority

Further information for press:
dr. Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: ;
press@ gvh.hu

http://www.gvh.hu

Further information:
Customer Service, GVH
Tel: +36 1 4728851
Email: ugyfelszolgalat@gvh.hu
http://www.gvh.hu

 

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The GVH terminated the competition supervision procedure against M-RTL

Based on a market signal and information in the public domain, the GVH noticed that Magyar RTL Televízió Zrt. (M-RTL), a significant participant of the nationwide television advertisement market, had been selling advertisers RTL Klub and RTL3 (Cool, Film+ and RTL II) channels in a package at a so-called bundled price (SAP+) since 2015; moreover it only offered more favourable terms if the advertisers undertook to advertise a certain percentage of their whole advertising on the RTL channel. These behaviours of M-RTL, through which it had presumably abused its dominant position, were likely to distort competition on the nationwide television advertisement market.

Similar concerns had previously arisen in procedure Number Vj/66/2011 relating to the merger of M-RTL and IKO Televisions Kft. In its resolution made on 19 December 2011, the GVH cleared M-RTL’s acquisition of control over IKO Televisions Kft. by accepting commitments that M-RTL would sell advertising space of the above-mentioned channels separately. According to the GVH’s decision the two-year period given for the realisation of the commitments (until the end of 2013) would ensure that there was enough time for market participants to adequately prepare for the changes resulting from the increase of M-RTL group’s portfolio, by for instance, certain channels cooperate to sell advertising space. According to the GVH, the two-year period would allow certain channels to become stronger on the advertising market, thereby resulting in competitive pressure for the group of undertakings established due to the above-mentioned merger.

After the closure of the 2014 business year and the closure of the ongoing contractual negotiations, the GVH was able to measure the potential effects of M-RTL’s behaviour. On 15 June 2015, the GVH initiated the competition supervision procedure Number Vj/49/2015 due to a presumed infringement of an abuse of a dominant position.

Since the initiation of the procedure there has been a restructuring of the market, due primarily to an increase in the portfolio of the Atmedia Kft. channel achieved in 2016. As a consequence of these changing market circumstances, the presumed dominant position of M-RTL could not be established and the GVH therefore terminated the procedure Number Vj/49/2015 by its resolution made on 20 June 2016.

Case number: Vj/49/2015.

Budapest, 15 July 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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