Hungary: expected changes in legislation

11 October 2010

Gergely Juhasz, Dr Titusz Puskár

In Hungary, a new piece of legislation is in the pipeline which would amend the law effective since January 2010, prohibiting unfair trade practices between retailers and suppliers in the Hungarian consumer food sector.

The aim of the legislative debate is to amend Act XCV of 2009 on the prohibition of unfair trade practices between retailers and suppliers in the consumer food sector (the “Unfair Trade Practices Act”) in a way favorable to small-scale suppliers. If enacted, the new law would impose stricter measures than those contained in the currently effective piece of legislation because such new measures would, amongst others, set that:

  • the countervalue of fresh fruits, vegetables and deteriorative food products would have to be paid for suppliers by retailers within 15 days instead of 30;

  • the placement of price reduction advertisements in the press will be prohibited, as well as any immediate termination of duly performed supplier agreements without a cause by retailers or any reduction of the final purchase price by the retailer in the absence of a relevant written agreement with the supplier; and

  • retailers whose net turnover is higher than HUF 5 billion would be obliged to prepare, update, publish and publicly file boilerplate terms and conditions as a result of the contemplated reduction of the currently applicable HUF 20 billion threshold.

In addition to the above, the competent authority would be able to impose additional sanctions against retailers violating prohibitions contained in the Unfair Trade Practices Act. In addition to imposing a fine between HUF 500,000 (cca. EUR 1,800) and HUF 2 billion (cca. EUR 7,480,033), the authority would be able to oblige the retailer to pay double compensation for suppliers against their damages suffered from the retailer’s unlawful practices and may also impose that the retail unit concerned be closed for a maximum period of 30 days.

The new measures are currently at pre-legislative stage and are debated by industry interest groups and government authorities.