Competition authority’s accelerated sector inquiries are becoming a trend in Hungary

The Hungarian Competition Authority (“GVH”) is rolling out its recently added competence of conducting accelerated sector inquiries. Most recently, the GVH finished its inquiry into the construction wood market and launched an inquiry into the market of COVID-19 rapid tests. The first accelerated sector inquiry of the GVH was carried out in the market of ceramic bricks, which we addressed in the October 2021 issue.

I. Accelerated sector inquiry in relation to the construction wood market

On 22 December 2021, the GVH concluded its second ever accelerated sector inquiry now in relation to the construction wood market. This second accelerated sector inquiry fits into the GVH’s priorities and strategic plan of paying maximum attention to the price increases in the construction industry announced in the middle of 2021.

During the accelerated sector inquiry, the GVH held hearings with various market players on the market processes, conducted coordinated on-site unannounced inspections across Hungary and contacted several undertakings to request the submission of data. The GVH investigated the market behaviour of forestry farms, wood processing plants, procurement undertakings, construction material retailers as well as contractors.

Ultimately, the sector inquiry did not reveal any market practices that would have necessitated the initiation of a competition control procedure. Nevertheless, several market problems were discovered during the inquiry, which may have an adverse effect on competition. To solve these problems, the GVH has presented the following four recommendations in its draft report:

(i) introduction of a statutory obligation for undertakings active in the retail of wooden construction materials to publish their prices both on their websites and at their physical points of sale to facilitate the price comparison of the consumers;

(ii) implementing state incentives for the research and innovation currently underway concerning wooden products to replace pine to reduce import dependency

(iii) the Government should develop tighter cooperation with the states exporting significant quantities of wood industry products to Hungary to ensure the more complete monitoring of the cross-border movement of wooden products; and

(iv) introduction of a statutory obligation to use an electronic administrative system for undertakings – currently using outdated, non-digital inventory recording and administrative systems – engaged in the distribution of wooden products with the support of targeted state aid system.

In the view of the GVH, the implementation of the above recommendations might reduce or moderate the price increase currently present on the construction wood market.

II. Accelerated sector inquiry into the market of coronavirus rapid tests

On 23 December 2021, the GVH launched an accelerated sector inquiry into the domestic market for COVID antibody detection tests, as it appears that the retail price of domestically available products is high in European comparison.

The GVH has already scrutinized this market and imposed fines on undertakings misleading Hungarian consumers regarding COVID related products (disinfectants) on two occasions (please see the press releases of these procedures here and here). Moreover, there is one procedure pending (please see here). Nevertheless, the GVH has continuously received market signals in relation to the prices of the rapid tests, which prompted this sectoral inquiry.

In this sectoral inquiry, the GVH examines the reasons behind the higher consumer price level compared to the European average. In the inquiry, the market supply and the recent market developments will be assessed as well as the behaviour of market players at different levels of the value chain and the prices they apply.

The sector inquiry will be based on data submission requests from a number of market players and the GVH will prepare a report presenting its findings. According to the timeline, the GVH has one month for the preparation of the draft report, which may be extended on two occasions by a maximum of one months each.

Please find the GVH’s report on the accelerated sector inquiry in relation to the construction wood market here (only in Hungarian) and the GVH’s press release regarding the launch of the inquiry on the COVID-19 rapid tests here.

For more information, please contact Dániel Arányi or Gábor Kutai.

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