Hungarian Competition Authority suspects coordinated price increases in foodstuffs

According to the GVH, it has become common practice for several food trade associations to issue notices stating that it is necessary to increase the prices of certain products. In some of these notices, they indicated both in percentage and in nominal terms the level of producer or processor price increases that would be justified for certain basic foodstuffs.

The President of the GVH, Csaba Rigó, drew the attention of several interest groups to the fact that the practice could lead to uniform pricing and increase inflationary pressures. He wrote that

there was a presumed causal link between the increase in the prices of basic foodstuffs and the communications issued by interest groups proposing price increases and declaring them necessary.

On this basis, "the publication of the notices could have led to a coordinated price increase that could fall within the scope of competition law and, in particular in an inflationary market environment, could lead to a coordinated pricing policy that would run counter to the criterion of autonomous market decision-making", the GVH President pointed out.

As he wrote, the starting point for the assessment of agreements between businesses under competition law is that companies make their market decisions independently, without engaging in coordinated market behaviour with competitors.

The President of the GVH has therefore proposed to review the information exchange and the practice of issuing notices in certain food markets and to modify it in a way that is more pro-competitive and does not lead to coordinated price increases, given that these may lead to a significant increase in consumer prices.

Under the Competition Act, a letter of formal notice does not constitute a finding of infringement, but it can be an aggravating factor if the prohibited conduct is not stopped and the Competition Authority takes action against it within the limits of its powers. If it is proven in a competition proceeding that the subject of the proceeding has engaged in illegal conduct, it may be subject to a significant fine (up to 13% of the previous year's net sales revenue).

Food inflation has been a topic of discussion several times recently, and the Ministry of National Economy is planning to expand the price monitoring system and has also consulted the National Trade Association (OKSZ).

Cover photo (for illustration purposes only): Portfolio