EU court squashes fine imposed on Spar by Hungary over food price freeze

That legislation prevents traders, without appropriate justification, from freely setting the selling prices and the quantities offered for sale of those products on the basis of economic considerations,

the Court said on Thursday.

How did we get here?

In February 2022, in the context of the Covid-19 pandemic, Hungary regulated, by Government Decree, the marketing of six basic products (certain types of sugar, wheat flour, sunflower oil, pigmeat, poultrymeat and milk).

From November 2022, as a result of the war in Ukraine, the decree was amended and two other products were added to the list, namely eggs and potatoes. That Government Decree remained in force until 31 July 2023.

According to that decree, traders that had already marketed those products at a specified earlier date were required, on pain of a fine, to offer for sale a predetermined quantity – based on, initially, the average daily quantity offered for sale during a reference period and, subsequently, the quantity of the products at issue in stock during that reference period – at a regulated price.

In May 2023, the Hungarian authorities imposed a fine on the retailer SPAR Magyarország after finding that, in one of its shops, it had not respected the daily quantities in stock of five products referred to in the decree.

SPAR brought proceedings before the Szeged High Court (Hungary) seeking annulment of the decision of the authorities. Since there were doubts concerning the compatibility of the Government Decree with the CMO  ['common market organisation'] Regulation and in particular with the principle of free formation of selling prices of agricultural products on the basis of fair competition,, that court sought a preliminary ruling from the Court of Justice.

The judgement

First of all, the Court notes that the Government Decree undermines fair competition, a fundamental component of the CMO Regulation. The obligation to offer for sale agricultural products at regulated prices and in specific quantities prevents traders from freely setting their selling prices and the quantities they wish to sell on the basis of economic considerations.

Next, the Court considers Hungary’s argument alleging that that restriction is justified by the objectives of combating inflation and protecting disadvantaged consumers by means of a guaranteed supply of basic foodstuffs at affordable prices.

The Court finds that,

even if the contested Government Decree were appropriate for achieving those objectives, the measures that it entails are not proportionate.

The undermining of free access by traders to the market in conditions of effective competition and the disturbance of the entire supply chain caused by the regulated prices and quantities imposed on those traders go beyond what is necessary to attain the objectives pursued by the decree.

In those conditions, the Court holds that the Hungarian Government Decree, including the system of fines provided for in that decree, is contrary to the CMO Regulation,

the ECJ concluded.

Gergely Gulyás, the Prime Minister's chief of staff, told journalists on Thursday that "we are not surprised", and that if it had been up to Brussels there would have been no [mandator] discount sales in Hungary, and neither would have been if it had been up to Spar."

He pointed out that this ruling applies to a specific fine that Spar will now not have to pay owing to the ECJ judgement.

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