Anna Turi Márk Kovács January 26 2023 Amendments to Hungarian Competition Act in 2023: what you need to know Schoenherr | Competition & Antitrust - Hungary Anna Turi , Márk Kovács Competition & Antitrust Amendments to merger control proceedingsHCA's new tool: letter of formal noticeNew powers for HCA on new EU digital markets legislationCommentCrucial amendments to the Hungarian Competition Act entered into force on 1 January 2023. Further changes will be enacted on 1 February 2023. This article briefly describes the most important changes.Amendments to merger control proceedingsThresholds and feesMost importantly for those dealing with merger control assessments and notifications, the merger notification thresholds and procedural fees have increased.Until the end of 2022, a merger had to be notified if the combined Hungarian turnover of the groups concerned exceeded 15 billion forints (approximately €37.5 million) and there were at least two groups of undertakings with a combined Hungarian turnover of at least 1 billion forints (approximately €2.5 million).Following the amendment, the combined turnover threshold will be increased to 20 billion forints (approximately €50 million) while the individual threshold will be increased to 1.5 billion forints (approximately €3.75 million).Procedural fees will also increase. The fee for a "phase one" competition procedure will increase from 3 million forints (approximately €6,600) to 4 million forints (approximately €10,000), while the fee for a "phase two" procedure will rise from 15 million forints (approximately €35,600) to 19 million forints (approximately €47,500). However, the fee for fast-track notification (1 million forints, approximately €2,500), in which most of the mergers are cleared, has not increased.The legislature justified the increase on the grounds of inflation.Penalties for breach of duty to notify or standstill obligation ("gun jumping")Rules on fines to be imposed for non-notified mergers, or cases in which the transaction was closed before clearance, have also changed. The good news for the companies concerned is that the minimum fine has been abolished, so the Hungarian Competition Authority (HCA) can even refrain from imposing the fine in certain cases. At the same time, the maximum daily fine will be increased from 200,000 forints (approximately €440) to 300,000 forints (approximately €750), which the legislature also justifies by citing inflation, as the previous amount was no longer a sufficient deterrent.Clarification of voluntary regime and othersIn addition, at the request of the industry, the legislature has clarified that if the mandatory notification thresholds are not met, the notification of mergers exceeding a 5 billion forint (approximately €11 million) combined threshold is indeed a voluntary option and not an obligation, even if it is unclear whether the merger will have adverse competitive effects.Furthermore, the legislature solves a previous problem of practical interpretation of the law by clarifying from which date the turnover thresholds are to be calculated when the merger is notified by the parties, and from which date the transaction is subject to an authorised investigation by the HCA (ie, exactly which financial year will be relevant to calculate the turnover thresholds).Furthermore, certain transactions of investment funds and private equity firms have been included in the exemptions from notification.HCA's new tool: letter of formal noticeFrom 1 January 2023 the president of the HCA will have a new tool to enforce compliance: a letter of formal notice to express concerns about suspected infringing conduct.This will be possible in cases where, in the absence of sufficient information and evidence, there is no reasonable likelihood of an infringement, but where market developments give rise to a suspicion of illegal behaviour.The letter of formal notice will not be part of the competition supervision procedure, nor will it lead to the establishment of an infringement. The HCA may refrain from the formal opening of competition supervision proceedings if the undertaking concerned successfully dispels the HCA's doubts about the infringement in its reply to the letter of formal notice or brings its conduct into line with the legal requirements. Interestingly, the HCA will also publish on its website a list of the alleged infringements, the relevant market and the number of letters of formal notice sent in the year under review, without mentioning the names of the addressees. In this way, market players will also be able to find out from the HCA's website what conducts the authority is concerned about.New powers for HCA on new EU digital markets legislationThe new EU Digital Markets Act (DMA) is designed to ensure that the big online content platforms, known as "gatekeepers", operate fairly. If they do not, the European Commission or the authorities designated by the member states may take action against them. In Hungary, the HCA has been appointed as the competent authority and will have to cooperate closely with the European Commission in its proceedings.The HCA will be able to open competition proceedings to determine whether the conduct of the gatekeeper company meets the requirements of the EU DMA. A new chapter of the Competition Act will set out detailed procedural rules.CommentThe increase in the merger notification thresholds will reduce the burden on the HCA, as the legislature expects the number of notifications to fall by between 10% and 15%. In 2021, 68 mergers were notified to the HCA, so the number of notifications the competition authority will have to deal with is likely to decrease by 8-10 cases per year.Some of the freed-up resources are expected to be used for the new powers – monitoring the activities of gatekeeper companies and sending letters of formal notice.Most of the above provisions entered into force on 1 January 2023. However, the increase in the administrative service fee for mergers and the changes in the fines for "gun jumping" will only apply from 1 February 2023.Companies should check carefully whether the mergers they plan to conclude in the near future are in fact notifiable based on the new thresholds.For further information on this topic please contact Anna Turi or Márk Kovács at Schoenherr Attorneys at Law by telephone (+36 1 8700 700) or email ([email protected] or [email protected]). The Schoenherr Attorneys at Law website can be accessed at www.schoenherr.eu.