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The GVH impels small and medium sized enterprises towards law-abiding behaviour by issuing warnings for the first time

The Gazdasági Versenyhivatal (GVH – the Hungarian Competition Authority) made decisions in two cases, one related to a medicine and one concerning the advertisement of a food supplement. In these two cases the GVH warned, for the first time, the small and medium sized enterprises involved in the proceedings.

According to a recent amendment of the Competition Act, the GVH may issue warnings to steer small and medium enterprises (SMEs) – which constitute the backbone of the Hungarian economy – in the direction of compliance with competition law. This sanction may only be used when an SME commits an infringement for the first time, and only if the infringement has not been committed in a public procurement cartel, in violation of European Union law or at the expense of vulnerable consumers.

In one of the concerned cases, the case of Aramis Pharma Kft., the GVH established that the undertaking had unlawfully advertised its Fluimucil product family as the non-prescription medicines were not presented based on the Summary of Product Characteristics.

In its second decision, which involved Kőrös-Net Szolgáltató és Kereskedő Kft., the GVH also established that the undertaking had committed an infringement by making unsubstantiated claims and claims not in line with the provisions of advertising set in the sectoral rules in relation to its distributed food products.

Within the framework of the warning, the GVH also obliged each undertaking to adopt a competition law compliance mechanism which is able to prevent infringements in the future (compliance programme). Each undertaking shall record the compliance programme in its internal procedures, and shall ensure that its future advertisements are checked before their publication by an internal colleague who has the adequate competence and an external independent expert (for example a lawyer or law firm, a consultancy firm or an independent non-governmental organisation possessing the necessary expertise) to ensure that its campaign is in line with the provisions of fair trade practices.

The warned undertakings shall report to the Competition Authority on the implementation of their compliance programmes. In the event of not doing so, the GVH shall immediately initiate enforcement, and may also impose an enforcement fine.

Case numbers:

  • Vj/97/2015 – Aramis Pharma Kft.
  • Vj/130/2015 – Kőrös-Net Szolgáltató és Kereskedő Kft.

Budapest, 29 September 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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GVH: faster and more efficient merger control, Cartel Chat for the fight against cartels

In the name of the Parliament, the Economic Committee approved the Annual Report of the Gazdasági Versenyhivatal (GVH – the Hungarian Competition Authority) on its activity in the year 2015 and on its experience with the application of the Competition Act.

In 2015 the fast and efficient conclusion of merger authorisation proceedings was still regarded by the GVH as a main priority, despite the fact that the number of such proceedings has been significantly increasing since the passing of the economic crisis. In the committee meeting the president of the GVH, dr. Miklós Juhász, confirmed that last year the GVH delivered decisions in all merger cases in a shorter period of time than that provided for in the Competition Act, thereby eliminating as quickly as possible the uncertainty stemming from the proceedings of the Authority.

In addition, Miklós Juhász stated that it is an explicit intention of the GVH to continually enhance the user-friendly nature of its activity. The GVH assists market actors to behave in a way that is compatible with the Competition Act by publishing user-friendly guidelines, handouts and notices on the Act's requirements. With this in mind, the GVH has published a Commentary on the Competition Act. As a further step in its user-friendly approach, the GVH has also modified its webpage to enable parties to easily book appointments online for access to the file.

One of the most important activities of the GVH, which is responsible for competition supervision, competition advocacy and the development of competition culture, is still its activity concerning the fight against cartels. The newest tool in this fight is the Cartel Chat, which was introduced last year. This is an anonymous contact system for providing information and asking questions about cartels.

More than two-thirds of the cartel cases that were investigated by the GVH between 2002 and 2013 involved small and medium-sized enterprises (SMEs). Consequently, the GVH sought to increase the SMEs’ competition awareness through its campaign against cartels entitled ‘It cannot be kept secret’, which was launched on the 1st of December last year.

The President confirmed that the protection of vulnerable consumers who are easily influenced by advertisements and offers due to their health age or difficult financial situation was an essential part of the GVH’s consumer protection activity in 2015 too. On the basis of the complaints and market notices that were addressed to the GVH, it ran an information campaign, entitled ‘Think Through Calmly’ which concerned 6 issues. The GVH has also drafted suggestions to solve the problems that arose in connection with product presentations.

The GVH celebrated two anniversaries last year:

  1. 25 years ago, the GVH began to operate in January 1991, on the basis of the Competition Act passed in 1990;

  1. The OECD-GVH Regional Centre for Competition in Budapest (RCC) was set up 10 years ago, in 2005. Relying on the Competition Department of the OECD and on the professional expertise of the GVH, the RCC provides capacity building assistance through seminars and professional training programmes on competition law and policy for competition enforcement agencies in the Central, East and South-East European region.

The annual report (in Hungarian) is available on the website of the GVH.

Budapest, 20 September 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

Printable version in PDF


 

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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