More than 1 billion HUF fine on Auchan for abusing its significant market power

The Gazdasági Versenyhivatal (GVH - Hungarian Competition Authority) in its decision on 23 March 2015 imposed a total fine of 1.061.300.000 HUF (3.6 million Euro) on Auchan Magyarország Kft. for infringing Act CLXIV of 2005 on Trade by demanding after sale price discounts from its suppliers in order for the suppliers’ products to be stocked, or continue to be stocked, by Auchan.

The investigation of the GVH revealed that between 1 June 2006 and 31 December 2014 Auchan demanded after sale price discounts from three-fourths of its non-food product suppliers in order for the suppliers’ products to begin to be stocked, or continue to be stocked, by Auchan. Each requested price discount was calculated on the basis of the entire net commodity value purchased from the supplier. The GVH was not able to identify any services for which the aforementioned after sale price discount may have served as compensation; it did not have any performance incentive function and in practice effectively operated as a fee.

The Act on Trade prohibits a dealer from imposing a unilateral charge on a supplier in order for a supplier to secure a place on a merchant supplier list and to be stocked by a retailer; furthermore, a dealer is not allowed to impose any fee for other services not required by a supplier.

When determining the fine, the GVH based its calculation on the net turnover achieved by Auchan from the after sale price discounts.

The GVH considered it a serious aggregating factor that Auchan continued its unlawful market behaviour even after the GVH published its SPAR decision (Vj/47/2010) in June 2012 in which it condemned similar behaviour.

A mitigating factor that was taken into account by the GVH was the fact that a proportion of (average 44%) the suppliers – small and medium-sized – were not considered to be vulnerable market participants.

Case number: Vj/60/2012.

Budapest, 23 March 2015.

Hungarian Competition Authority

 Further information:
Andrea BASA
Spokesperson
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postal address: 1391 Budapest, 62. POB 211
Tel: (+36-1) 472-8902
Email: ,
http://www.gvh.hu

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Proceeding initiated for suspected cartel

On 10 March 2015 the Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH) initiated a competition supervision proceeding, against seven undertakings (ALCUFER Ipari Kereskedelmi és Szolgáltató Kft., FE-GROUP INVEST Vagyonkezelő, Tanácsadó és Nagykereskedelmi Zrt., JÁSZ-PLASZTIK Kft., Észak-dunántúli MÉH Nyersanyag-hasznosító Zrt., Észak-magyarországi MÉH Nyersanyaghasznosító Zrt., AKKUCITY Akkumulátor és Akkumulátorhulladék Kereskedelmi Kft. and VENTUM Kereskedelmi és Szolgáltató Kft.). At the same time the GVH held unannounced raids at the premises of the undertakings.

GVH noticed that since 2013, the above-mentioned undertakings have been negotiating a market sharing agreement on the lead-acid battery recycling market. The undertakings under investigations 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. 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 the 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/2/2015.

Budapest, 11 March 2015.

Hungarian Competition Authority

 Further information:
Andrea BASA
Spokesperson
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postaddress: 1391 Budapest, 62. POB 211
Tel: (+36-1) 472-8902
Email: ,
http://www.gvh.hu

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Proceedings against UPC for suspected abuse of dominance

The Hungarian Competition Authority (GVH) initiated proceedings against UPC Magyarország Telekommunikációs Kft. (UPC) for its conduct in its numerical district 29.

The GVH commenced supervisory proceedings on 20 February, based on a large number of consumer complaints, claiming that in district 29 of UPC (Monor and its surroundings) the quality of the internet service provided is lower (the upload and download speeds are slower) while the price of the internet subscription is higher, compared to the rest of the districts in the country. UPC is the sole telecommunication service provider in Monor and its neighbouring villages.

Through the above-described practice, UPC has presumably abused its dominant position, in contrary to the provisions of the Competition Act. The initiation of an investigation is necessary in order to protect the public interest, taking into account the fact that the conduct of UPC affects a large group of consumers and that the GVH has received a significant number of consumer complaints.

The initiation of the competition supervision proceeding does not mean that the undertaking in question has actually committed an infringement. The proceeding aims to clarify the facts and to prove that the presumed infringement has been committed. According to the Competition Act, proceedings must be closed within 6 months; however, this period can be extended on two occasions by a further six months each time, depending on the complexity of the case.

Case number: Vj/15/2015

Budapest, 2 March, 2015

 

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postal address: 1391 Budapest, 62. POB 211
Tel: (+36-1) 472-8902
Email: 
http://www.gvh.hu

 

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GVH investigating cooperation between Telekom and Telenor

The GVH (Hungarian Competition Authority) initiated supervisory proceedings against Magyar Telekom Távközlési Nyrt. (Telekom) and Telenor Magyarország Zrt. (Telenor).

Both the undertakings and the Nemzeti Média és Hírközlési Hatóság (National Media and Infocommunications Authority) informed the GVH about the cooperation existing between the undertakings in relation to their broadband services’ networks and frequencies. The cooperation of the parties could significantly affect the quality of mobile services in Hungary and could also influence the conditions existing on the market in the services sector in the long run.

The GVH launched the investigation in order to determine whether the above mentioned cooperation conforms or conflicts with the provisions of the Hungarian Competition Act and the Treaty on the Functioning of the European Union.

Taking into account the market power of the parties, the nature of the services they provide and also the number of potentially affected consumers, the initiation of an investigation is necessary in order to protect the public interest.

The initiation of the supervisory proceedings does not mean that the practices of the undertakings are unlawful. The proceedings aim to clarify the facts and their relevance to competition law. According to the Competition Act, the proceedings must be concluded within 6 months; however, depending on the complexity of the case, this period can be extended on two occasions by up to six months each time.

Case number: VJ/18/2015

Budapest, 25 February 2015

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postal address: 1391 Budapest, 62. POB 211
Tel: (+36-1) 472-8902
Email: 
http://www.gvh.hu

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Fines for cartel in public procurement

According to the GVH’s (Hungarian Competition Authority) decision ÉTER-1. Mérnöki és Tanácsadó Kft. (ÉTER-1), and AQUAPLUS Kútfúró, Építő és Termálenergetikai Kft. (AQUAPLUS) negotiated their entering prices and offers on public procurement procedures published by the local government of Komló. The GVH reached the same conclusion in the case of ÉTER-1 and QUALIKO Műszaki Tervezési és Tanácsadói Iroda Bt. (QUALIKO) regarding the public procurement procedure published by the Hungarian National Police Headquarters (ORFK) and in the case of ÉTER-1, EUROLARES Gépészeti, Kereskedelmi és Szolgáltató Kft. (EUROLARES), RVI Magyarország Tanácsadó Kft. (RVI) and SCHNEIDER Investment Ipari Szolgáltató és Kereskedelmi Kft. (SCHNEIDER) regarding the public procurements published by the county police departments. For the infringements the GVH imposed a total fine of 148 390 000 HUF on the undertakings.

The local government of Komló published a public procurement for the implementation of solar energy production within the framework of KEOP (Környezet és Energia Operatív Program - Environment and Energy Operational Programme, one of the operational programmes intended to serve the overall objective, horizontal policies and the six thematic and territorial priorities of the New Hungary Development Plan – the National Strategic Reference Framework in EU terminology – applicable to the European Union’s budget projection period between 2007 and 2013). The National Police Headquarters, the Budapest Police Department and the county police departments published public tenders for the energetic modernisation of their buildings. All of the public tenders were simplified procedures, without prior publication of a contract notice, in which the caller requested offers from at least three small or medium-sized enterprises that were found suitable based on a preliminarily examination.

During dawn raids the GVH confiscated several e-mails and other documents as evidence of the infringements. Among the offers for the county police departments’ tenders there were three where even the name on the offer was different from the entering undertaking’s actual name. From this fact the GVH drew the conclusion that the project proposal was not made by the undertaking that entered it.

The GVH concluded the following:

  • in the case of the public tender in Komló, ÉTER-1 and AQUAPLUS negotiated their entering prices for the tender of Kenderföld-Somági Elementary School and Kindergarten and the Communities’ House of Komló;

  • ÉTER-1 and QUALIKO negotiated their entering prices and conditions in the tender of the Hungarian Police;

  • in the case of 5 county police departments’ (RFKs) tenders ÉTER-1 and 3 other undertakings colluded to assist ÉTER-1 to win the tenders as follows:

  • in the case of the tender published by the RFK of Bács-Kiskun County, ÉTER-1 negotiated its entering prices with RVI;

  • in the case of the tender published by the RFK of Békés County, ÉTER-1 negotiated its entering prices with RVI;

  • in the case of the tender published by the RFK of Csongrád County, ÉTER-1 negotiated its entering prices with RVI and EUROLARES;

  • in the case of the tender published by the RFK of Komárom-Esztergom County, ÉTER-1 negotiated its entering prices with SCHNEIDER and EUROLARES;

  • in the case of the tender published by the RFK of Fejér County, ÉTER-1 negotiated its entering prices with EUROLARES and RVI.

Consequently, the investigated undertakings had violated the prohibition of restrictive agreements for which the GVH imposed the following fines:

ÉTER-1                                        16 600 000 HUF     (approx. 54 000 EUR)

EUROLARES                             14 400 000 HUF     (approx. 47 000 EUR)

RVI                                                9 800 000 HUF     (approx. 32 000 EUR)

QUALIKO                                       590 000 HUF     (approx. 2 000 EUR)

SCHNEIDER                              30 600 000 HUF     (approx. 100 000 EUR)

AQUAPLUS                               76 400 000 HUF     (approx. 248 000 EUR)

The GVH based the calculation of the basic amount of fine on three times the amount of the winning bid and considered aggravating and mitigating circumstances. The GVH took into account, among other things, the following facts:

  • market sharing in a public procurement procedure is one of the most serious competition law infringements as it not only compromises the interest of the publisher of a tender but also severely damages the public interest;

  • the undertakings under investigation had a significant combined market share having regard to the restricted procedures;

  • the implemented market-sharing arrangement was successful, the market impact attributable to the practice of the undertakings under investigation had actually occurred, as ÉTER-1 won the tenders;

  • in the case of the projects in Komló the contract between ÉTER-1 and the council of Komló did not enter into force, thus the tender did not have an actual market effect.

In the case of ÉTER-1 the GVH also considered the fact that the undertaking not only participated in the restrictive agreements but actively organised them.

Case number: Vj-65/2012.

Budapest, 4 February 2015

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postal address: 1391 Budapest, 62. POB 211
Tel: (+36-1) 472-8902
Email: 

http://www.gvh.hu

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