Last week, the Hungarian parliament approved a new act to open all postal services in Hungary to private sector companies, thus eliminating the monopoly of state-owned Magyar Posta Zrt.

The opening of the Hungarian postal services market is based on the relevant EU di-rectives that require Hungary and other member states, such as the Czech Republic, Luxemburg, Greece, Poland and Romania, to implement full liberalization in their postal services markets by the start of 2013.

Although competitors may enter the market, it is the government's openly declared intention to preserve the dominant position of Magyar Posta Zrt. The government therefore will maintain Magyar Posta Zrt’s universal service provider status until the end of 2020 to guarantee that postal services are publicly available at affordable prices. Under the new act, the losses of Magyar Posta Zrt stemming from the provi-sion of those services that are deemed indispensable though not profitable may be financed by the Hungarian state budget in the form of a state subsidy. However, privately-owned market players may be obliged to co-finance such losses on the part of Magyar Posta Zrt proportionately to their respective market share.

Competitors are entitled to enter the postal services market upon receiving permis-sion from the National Media and Telecommunications Authority (NMHH). That per-mission may not be withheld by the NMHH, provided that market players meet the strict quality and operational prerequisites set forth by the new law.

If several service providers will be able to provide universal services covering the entire territory of the country at competitive prices, an open tender is to be pub-lished for the provision of universal postal services as of 2020. If no real competitor emerges, the government will extend the universal service provider status of Ma-gyar Posta Zrt beyond 2020.