The proceedings against Fővárosi Vízművek Zrt. and Fővárosi Csatornázási Művek Zrt. have ended with the acceptance of commitments

The Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH) accepted the commitments of Fővárosi Vízművek Zrt. (FVM) and Fővárosi Csatornázási Művek Zrt. (FCSM), according to which the two service providers will use the data gathered in 2011 by the Hungarian Central Statistical Office (KSH) when determining the water needs during the calculation of the water utility development contribution.

The GVH, in the course of its proceedings against FVM and FCSM, investigated the calculation of the water utility development contribution and its pricing. Both undertakings determine the water utility development contribution as the product of the water needs and the contribution per one consumer unit. The proceedings were aimed at establishing whether the amount of the water utility development contribution was excessive.

The investigation established that, considering the data of the KSH gathered during the 2011 census (which shows that household water consumption in Budapest has been showing a continuous declining tendency over the last 20 years), both undertakings had determined the water needs – based on the consumption data of the previous years – to be higher than could be justified. In order to eliminate the above mentioned anomaly and also to harmonise their behaviour with the provisions of the Competition Act, FMV and FMCS submitted commitment applications.

The essence of the commitments is that in the future FVM and FCSM will calculate the water needs per household with regard to inhabitants based on the data of the KSH (average number of households), taking into account the average water consumption per capita.

During the assessment of a commitment application the main goal of the GVH is to ensure the efficient protection of the public interest. Commitments make it possible to more efficiently eliminate a behaviour that is contrary to the provisions of the Competition Act, and the decision made in a commitment application also serves as a guideline for other market operators. When making its decision the GVH assesses the circumstances for and against accepting the commitment, taking into consideration the characteristics of the relevant market.

In both proceedings the GVH regarded the following as circumstances in favour of accepting the commitments:

  • that the GVH had not established that the undertakings had infringed the provisions of the Competition Act in the last five years,
  • that the practice resulting from the acceptance of the commitments may incentivise other water utility providers more than the usual to accommodate the amount of their water utility development contribution to the actual water consumption and to the arising costs,
  • compliance with the commitments probably excludes the risk of recurrence of the detected problem, and it also provides a solid base for the price determination by authorities in the future (which is also accepted by the parties under investigation),
  • there is no relevant legal provision for the determination of the amount of the water utility development contribution, and the determination of the amount of the contribution is exceptionally complex and concerns different areas (along regional and social factors), therefore there is no coherent market practice in this regard.

Overall, the Competition Council of the GVH established that the public interest may be best served by the acceptance of the commitments, and terminated the proceedings.

Case numbers:

  • Fővárosi Vízművek Zrt. – Vj/98/2011.
  • Fővárosi Csatornázási Művek Zrt. – Vj/99/2011.

Budapest, 12 December 2014.

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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K&H fined for deceptive advertising

According to the GVH’s (Hungarian Competition Authority) decision, K&H Bank was engaged in unfair market behaviour while promoting its K&H MIX savings product. The GVH imposed a fine of 80 000 000 HUF (approx. 260 000 EUR) on the bank for the infringement.

Between 25 January and 28 February 2014, K&H Bank advertised its K&H MIX savings product in an integrated marketing campaign. The explicitly worded main message contained in every ad, informed the targeted consumers that the savings plan provided a 7.8% annual interest rate and EBKM (Unified Deposit Rate Index) and in the ads – except for the television and online ads – the specific term stating that the promotional interest rate only applied to the “deposit part” was not communicated in a way that was appreciable for consumers.

The GVH stated that although K&H Bank did display some of the relevant conditions in its commercials it did not cover all the relevant conditions (and there was no reference to further conditions either), thus the promised 7.8% interest and EBKM rate did not satisfy the criteria of truthfulness as the high interest rate – well over the market level – was only available if all of the following conditions were met:

· the amount of the savings had to be between 150 000 and 25 million HUF (500 and 82 000 EUR)

  • 1/3 of the savings had to be placed into deposits and 2/3 into investment funds
  • the savings could only be deposited in closed-end funds, closed-end asset funds or K&H yield-protected life insurance
  • duration of the deposit had to be 60 days
  • and only in the case of new saving contracts.

The GVH further concluded that in the ads displayed on ATM screens, billboards, citylight billboards, flyers, window-stickers and in the press it was not implied that the product is a combined (deposit and investment) savings plan. The main message of these advertisements did not inform consumers that the promised annual return only applied to the deposit part.

Based on the above-mentioned facts the GVH concluded that K&H Bank had

1. provided misleading information about the 7.8 % interest rate and EBKM

2. deceptively suggested in some ads that the K&H MIX saving plan was a deposit plan

The GVH based the calculation of the fine on the cost of the advertising tools. During the determination of the amount of the fine the GVH regarded as aggravating factors that

  • the advertisements reached a broad range of consumers
  • the undertaking had previously been sentenced twice in the past 5 years for similar infringements
  • the product in question – having regard to the non-predictable returns – is of confidential nature.

Case number: Vj/25/2013.

Budapest, 5 December 2014.

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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The driving schools in Győr have concerted the price of their trainings

According to the decision of the Hungarian Competition Authority (Gazdasági Versenyhivatal – GVH), the ATI Autóközlekedési Tanintézet Kft., "BILUX" Győr-Moson-Sopron Megyei Gépjárművezető Kft., HORVÁTH TANODA Oktató és Vizsgaközpont Kft., MAZSOLA AUTÓS TANODA Szolgáltató Bt., "New Easy Rider" Autósiskola Járművezető-képző Kft., PANDA Autósiskola, Kereskedelmi és Szolgáltató Bt., QUALITÄT GÉPJÁRMŰVEZETŐ-KÉPZŐ Kft. (driving schools) and several self-employed people agreed to raise the prices of their trainings regarding the training of category “B” drivers in Győr. The GVH imposed a fine of 19 410 000 HUF (cca 64 000 EUR) on seven undertakings and eight self-employed people.

The GVH established that at their meeting on 5 April 2012 the above-mentioned undertakings and several self-employed people agreed to raise the prices of their trainings with the aim of restricting competition.

During the investigation the GVH seized two e-mails. The e-mail sent by the executive director of the biggest driving school in the town of Győr informed his hospitalised colleague that he had summoned the managers of Győr’s driving schools in order to raise the prices of the trainings for obtaining driving licences. The contents of the e-mail make it clear that the topic of the meeting held on 5 April 2012 was a price increase by a unified amount. The e-mail sent by the executive director on the next day reported the success of the meeting.

The driving schools and self-employed people wished to raise the prices of category “B” trainings in two steps amounting to a total of 20 000 HUF (cca 64 EUR), at the initiative of "BILUX" Győr-Moson-Sopron Megyei Gépjárművezető Kft. The price raise took place in May and in November by an amount of around 10 000 HUF each time.

Through the above-mentioned conduct the undertakings and self-employed people involved in the proceeding infringed the prohibition of restrictive agreements, therefore the GVH imposed competition supervision fines totalling 19 410 000 HUF, as follows:

 

 

 

Driving school / self-employed person

 

Amount of the fine (HUF)

 

Amount of the fine (cca EUR)

1.

ATI Autóközlekedési Tanintézet Kft.

430.000

1.420

2.

BILUX" Győr-Moson-Sopron Megyei Gépjárművezető Kft.

9.100.000

30.030

3.

Gábor Göbölös self-employed person

650.000

2.150

4.

HORVÁTH TANODA Oktató és Vizsgaközpont Kft

725.000

2.390

5.

József Koczka self-employed person

85.000

280

6.

Csaba Kránitz self-employed person

285.000

940

7.

MAZSOLA AUTÓS TANODA Szolgáltató Bt.

430.000

1.420

8.

"New Easy Rider" Autósiskola Járművezető-képző Kft.

1.450.000

4.790

9.

PANDA Autósiskola, Kereskedelmi és Szolgáltató Bt.

200.000

660

10.

QUALITÄT GÉPJÁRMŰVEZETŐ-KÉPZŐ Kft.

2.180.000

7.190

11.

József Roncz self-employed person

390.000

1.290

12.

Zsolt Schreiner self-employed person

285.000

940

13.

László Stern self-employed person

135.000

450

14.

Károly Szabó self-employed person

835.000

2.760

15.

József Szücs self-employed person

2.230.000

7.360

As the base amount of the fine the GVH regarded the net sum of the revenue from the training of category “B” drivers in 2012, and then it evaluated aggravating and mitigating circumstances.

The Competition Council – among other things – took into consideration the following:

  • that horizontal price fixing between competitors is the most egregious competition law infringement
  • that the combined market share of the parties is excessively high
  • that the agreement was de facto carried out by the parties

The GVH terminated the competition supervision proceeding with regard to the following behaviour of the parties:

  • trainings outside of Győr during the whole investigated period
  • behaviour relating to driving licences and courses not involving the training of category “B”   drivers

Case number: Vj/40/2013.

Budapest, 3 December 2014.

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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The GVH analyses the characteristics of the motor vehicle sector

On 1 December 2014 the Hungarian Competition Authority (Gazdasági Versenyhivatal, GVH) initiated a market analysis aimed at investigating the characteristics of the car and LCV distribution and repair markets in Hungary.

A wide range of market operators and customers are affected by the developments and characteristics of the motor vehicle sector, thus getting to know these is of high importance to the GVH. In the course of the market analysis the GVH wishes to analyse the specific design of the networks related to the sale and repair of cars and LCVs, the changes affecting these networks and also the inter- and intra-brand competition. During the market analysis the GVH will pay particular attention to examining the frames of and possible restraints to competition regarding the repair of cars, such as the question of access to warranty repair and spare parts, and also to analysing the market condition of independent repairers.

In the course of the market analysis the GVH plans to contact the major car importers in Hungary (general agencies), the undertakings which sell and repair cars (retailers, repairers) and their representative bodies, and the authorities and other public entities which have information about the market relations. Furthermore, a market research is also expected to be conducted.

The market analysis is a fundamentally different tool from the administrative proceedings of the GVH, in the course of which using mainly publicly available information and information voluntarily provided by the concerned parties the GVH surveys and analyses the functioning of the investigated market, the market trends, and how these affect competition, business partners and especially consumers.

The outcome of the market analysis, the uncovered facts and statements will be compiled in a market analysis study and published on the website of the GVH.

The GVH expects to receive the observations of the concerned parties at the following e-mail address: . The communication about the initiation of the market analysis, which also contains the planned schedule of the analysis can be found on the website of the GVH (in Hungarian)

Budapest, 1 December 2014.

Hungarian Competition Authority

Further information:
Andrea BASA
Spokeswoman
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postaddress: 1245 Budapest, 5. POB 1036
Tel: (+36-1) 472-8902
Email: ,
http://www.gvh.hu

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Vodafone’s advertising campaign ruled unlawful

According to the GVH’s (Hungarian Competition Authority) decision, Vodafone Magyarország Mobil Távközlési Zrt. (Vodafone) broadcasted comparative advertisements and engaged in unfair market behaviour in its “Network of the Most” campaign. The GVH imposed a 125 000 000 HUF (approx. 415 000 EUR) fine on Vodafone for the infringement.

The GVH concluded that the categorical statements of some advertisements in the campaign had conveyed the message to consumers that Vodafone has the best and fastest data network. Consequently, these advertisements were comparative and unlawful. Due to the nature of mobile internet (communication technology, network workload, environmental conditions) the speed of networks cannot be legitimately and objectively compared. Among other reasons, verifiable comparison is not possible because the National Media and Infocommunications Authority of Hungary no longer publishes mobile operators’ coverage maps and other technology data (GPRS, EDGE, 3G, HSPA).

The GVH also determined that the following sentences

“At the fastest, longest, highest and widest places the Vodafone 3G network is available. As the only network in the country with a 97,4% coverage, the Network of the Most goes with you everywhere. Vodafone, the Network of the Most”

orally communicated in Vodafone’s TV advertisements were deceptive, as consumers generally pay attention to the information emphasised at the beginning of an ad and lose some interest towards the end of an ad, thus missing (in this particular case) the information that the superlative adjectives used were in fact referring to the sights of Hungary shown in the advertisement and not to the network of Vodafone.

The measurements taken about Vodafone’s network were not representative, the mobile operator did not disclose any comparative data, and of the 10 locations shown in the advertisements, Vodafone could only prove that proper 3G coverage existed in one of these locations.

The GVH based the calculation of the fine on the advertising costs of Vodafone. During the determination of the amount of the fine the GVH regarded as aggravating factors that the advertisements reached a broad range of consumers, and that the undertaking had previously been sentenced several times for similar infringements. It was considered as an attenuating factor that consumers were able to obtain more adequate and detailed information from other sources before making a decision.

Case number: Vj/77/2013.

Budapest, 14 November 2014

Hungarian Competition Authority

Further information:
Andrea BASA
Spokeswoman
Mail: 1054 Budapest, V. ker. Alkotmány u. 5.
Postaddress: 1245 Budapest, 5. POB 1036
Tel: (+36-1) 472-8902
Email: ,

http://www.gvh.hu

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