LIDC-VIENNA CONGRESS 2009 - Question A
Hungarian national report
LIDC – VIENNA CONGRESS 2009
Question A: Should a competition authority enjoy an unfettered discretionary powerin the context of the investigation of competition law infringements, or should its margin of discretion be subject to certain limits?
Preliminary Remark – The scope of this questionnaire is limited to infringements of Articles 81-82 EC and equivalent national law provisions. It thus does not cover (i) State Aid rules; (ii) infringements of procedural rules; (iii) infringements of merger control rules; and (iv) other competition-law related infringements.
1.General Questions
References and abbreviations:
Rules of Administrative Procedure / Act CXL of 2004 on the General Rules of Administrative Procedures and ServicesCompetition Act / Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices
Rules of Civil Procedure / Act III of 1952 on the Code of Civil Procedure
Trade Act / Act CLXIV of 2005 on Trade
Act on Business Advertising Activity / Act XLVIII of 2008 on the Basic Requirements and Certain Restrictions of Commercial Advertising Activities
Unfair Commercial Practices Act / Act XLVII of 2008 on Unfair Business-to-Consumer Commercial Practices
Amendment / Act XIV of 2009 on the amendment of the Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices
Principles / Principles concerning the freedom of competition, followed by the Competition Authority (2007)
Internal Order / Internal order of the President of the Competition AuthorityNr. 1/Eln. /2007. on the Procedural and Structural Rules of the Competition Authority
Competition Authority / Hungarian Competition Authority (Gazdasági Versenyhivatal)
1.1Please state your name and the country to which your report refers.
HUNGARY
Members of the national Working Group: Zoltán HEGYMEGI-BARAKONYI (national rapporteur) - Julianna BAKI - Tibor BIHARY - Gábor FEJES - Judit FIRNIKSZ - Márton KOCSIS - Péter MEZEI - Zoltán MAROSI - Álmos PAPP - Katalin SZAMOSI - Pál SZILÁGYI - Adrienn TÓTH
1.2How many competition authorities in your country are entrusted with the task of investigating infringements of competition law? Please indicate the names of these authorities and describe their functions and the types of competition law infringements they can investigate. Please describe the institutional structure of these authorities and provide figures regarding their human and financial resources.
A) TheHungarian Competition Authority (hereinafter: Competition Authority)has exclusive jurisdiction to investigate agreements allegedly restricting competition and alleged abuses of dominant position. Furthermore the Competition Authority is the only authority in Hungary, which may cooperate with other NCAs by applying Articles 81 and 82 EC, based on Council Regulation 1/2003/EC[1]. In addition, it is in the Competition Authority's exclusive jurisdiction to approve mergers.
B)The Competition Authority has jurisdiction to enforce laws ensuring that consumers are provided withfair information, thus the Competition Authority shall proceed:
(i) if competition is affected by the unfair commercial practice based on the Hungarian act implementing the Unfair Commercial Practices Directive; and
(ii) in case of misleading and comparative advertising pursuant to the Act on Business Advertising Activity; and
(iii) based on the Competition Act in casesin connection with the prohibition of unfair influence of business decisions.
The Competition Authority shall take part in the enforcement of the Regulation 2006/2004/EC on cooperation between national authorities responsible for the enforcement of consumer protection laws, in cases where an unfair commercial practice seriously affects competition (Section 10 subsection (3) of the Unfair Commercial Practices Act; Section 24 subsections (2)-(3) of the Act on Business Advertising Activity).
C) Furthermore, pursuant to the Act on Trade, the Competition Authority has jurisdiction to enforce the special behavioral rules on retailers having significant market power (Section 9 subsection (3) of the Act on Trade).
D) The Competition Authority is an independent agency under the sole control of Parliament; its independence is ensured by the fact, that only an act of Parliament can assign a task to the Competition Authority (Section 33 of the Competition Act, Section 9 subsection (3) of the Trade Act). Consequently, the Competition Authority's budget may only be established and amended by the Parliament (Section 33 subsection (1) of the Competition Act). The budget of the Competition Authority for 2009 is HUF 1652,4 million (approximately EUR 5.8 million) established by the act on the annual state budget.
The Competition Authority is headed by the President. The Competition Authority has two vice-presidents; one of the vice presidents is the chair of the Competition Council(Section 35 subsections (1)-(2) of the Competition Act) and the other vice president is responsible for the case handlers.
The number of people employed by the Competition Authorityis approximately 120.[2] The following departmentsoperate within the Competition Authority focusing on the belowlisted industries and case types:
(a)Consumer Protection Department,
(b)Cartel Department,
(c)Production and Services Department,
(d)Network Industries Department,
The investigation is conducted by case handlers, who are members of the professional departments, and their work is supported by further organizational units (Legal Department, International Affairs Department, Court Representation Department, Chief Economist). The Competition Council is the only entity, operating as a separate decision-making body within the Competition Authority that can adopt a decision on the merit of a case (resolution).
The members of the Competition Council are civil servants of the Competition Authority, however, they act independently during the investigations, consequently they do not receive instructions, and their decision is only subject to the law (Section 38 subsection (2) of the Competition Act).
1.3Please indicate whether the investigating authorities (i) are also competent to take decisions finding, terminating and sanctioning infringements; (ii) must refer the results of their investigation to a different administrative entity which, in turn, holds the duty to decide the case, and sanction infringements or (iii) shall act otherwise (e.g. bring proceedings before a court).
The Competition Authority'sproceeding is based on a special working method in accordance with the detailsprovided above: the case handlers conduct the investigations, but as stated earlier, the Competition Council is the only organ, operating as a separate decision-making body within the Competition Authority, that can adopt a decision on the merit of a case. The Competition Council is acting in panels of three or in difficult cases the panel comprises of five-members. The case handler, in his/her report may only propose a decision to be taken by the Competition Council. The Competition Council has the sole authority to establish the unlawful nature of a given conductin aresolution.It may also impose a fine as a sanction, may prohibit a conduct or it may impose obligations on the undertaking, if it finds that a particular conduct is unlawful. In addition, both the case handler and the Competition Council shall terminate the proceeding, if (i) the circumstances which gave rise to the ordering of the investigation do not exist, or (ii) if the evidence obtained in the course of the proceeding does not substantiatethe existence of an infringement of the provisions of the Competition Act and further results cannot be expected from the investigation. Furthermore, the Competition Council may accept commitments, for more details see the below chapter 6 (Sections 47-48, Section 71/A, Section 72 subsection (1), and Section 75 of the Competition Act).
1.4Do competition authorities start investigations at the request of a complainant, ex officio or both? Could you estimate the respective shares of investigations upon request and of ex officio investigations?
Cartel and abuse of dominance cases are initiated ex officio, regardless of how the Competition Authority became aware of the alleged infringement.Anyone becoming aware of an infringement may lodge a formal or informal complaint at the Competition Authority (Section 67 of the Competition Act, Section 43/G subsection (1) of the Competition Act). During 2008, 24 proceedings were initiated based on formal or informal complaint, which took 63 percent of all cases commenced on the basis of alleged cartels or abuses of dominant position.
1.5.If your country operates a leniency programme for hardcore cartel infringements: has the backlog of pending cartels cases increased since the introduction of the leniency programme? To what extent has the leniency programme reduced the number of ex officio investigations started by the competition authority?
Hungaryoperates a leniency program, the related investigationsare also initiated ex officio, thus there is no difference between the investigations in this respect. The introduction of a leniency policy in 2003 has not led to a significant increase in the number of proceedings. This is illustrated in the below table for the last five years:
Year / Procedures commenced upon leniency policy in the given year[3]2004 / 1
2005 / 3
2006 / 0
2007 / 1
2008 / 1
Currently there are two investigations pendingbased on the leniency policy.
1.6 Can you list the various methods of referral to the authority of your country and, where applicable, provide details of the most common referral methods (third party complaints, applications for immunity by parties to an agreement, notification of a cooperation agreement by the parties, bounties for corporate individuals, referral by an executive body (Minister, etc..), referral by another authority (authority of a third country - ECN or other - or sectoral regulator))?
The Competition Authority may start an investigation at its own initiative. In addition, cases can be commenced in the following manners (however cases relating to cartels and abuses of dominant position always initiated ex officio by the Competition Authority):
A) Formal or informal complaint: which are in fact the most commonly used methodsfor initiating a case, see question 1.4 and chapters 2 and 4.
B) Based on referral by another authority: if any authority determines that the Competition Authority has proper jurisdiction in a case before the other authority, it refers the case to the Competition Authority (Section 22 (2) of the Rules of Administrative Procedure).
C) Notification from civil courts:The court must notifythe Competition Authority, without delay of any lawsuits, which should be assessed under the provisions of the Competition Act. If, the Competition Authority, at any phase of a lawsuit, notifies the court about the initiation of an competition supervision proceeding in the given case, then the court must suspend its proceeding until a final and binding decision is made in the administrative case before the Competition Authority, or if its decision is challenged before the administrative courts, then until the judicial review of the Competition authority's decision is concluded by the courts.(Section 88/B of the Competition Act).
D) European Competition Network: the rules governing the cooperation within the ECN shall apply to Competition Authority as well.
E) Leniency Policy: see question 1.5.
2.The Preliminary Investigation – Procedural Issues
2.1Does the competition authority systematically carry out a preliminary investigation before the opening of a formal investigation? If so, do the interested parties (for instance, the complainant or the company under investigation, or any affected third party) know about the existence and scope of the preliminary investigation, or does it remain it completely secret?
A) The Competition Authority systematically carries out preliminary investigationsthe purpose of which is to collect data of sufficient quality and quantity for an adequate assessment, and more specifically to determine whether a given conduct or a consequent market situation, indicates the necessity for a competition law intervention.
The Competition Authority continuously monitors the market activities and the conduct of undertakings operating on a particular market, thereby, gathering a wide range of information. Simultaneously, the Competition Authority becomes aware of certain market distortions (or of the situation threatening with it), mostly on the basis of formal and informal complaints of market participants and consumers. The preliminary investigation based on formal or informal complaint is not part of the competition supervision proceeding. Formal complaints are handled pursuant to Section 43/H of the Competition Act and the provisions of the Rules of Administrative Procedure and other provisions of the Competition Act. Informal complaints are handled pursuant to Section 43/I of the Competition Act.
B) Formal complaint
The lodging of a formal complaint is not restricted in any manner; consequently any person may lodge a formal complaint, without being personally affected. In case of a formal complaint a so-called complaint form must be completed. This form is available at the Competition Authority's homepage (Sections 43/G-43/H of the Competition Act). The complainant, after lodgingthe complaint, is not informed about the opening and the details of the (preliminary) investigation; the rules on notification of closing the (preliminary) investigation are set out in the question 2.4 below.
C) Informal complaint
If a complaint fails to meet the formal and substantive requirements of a formal complaint (i.e.: if the complaint form specified above has not been completed and filed by the complainant), it is handled as an informal complaint. The complainant, after having submitted its informal complaint, is not informed about the opening and or the details of the (preliminary) investigation (Section 43/H of the Competition Act).
D) The complainee only learns about the preliminary investigation from theCompetition Authority's data request which identifies the type of the alleged conduct, justifying the data request. In case of formal complaints, data request is considered a formal request and is made in the form of an order, however in case of an informal complaint, the data request is of informal nature, sent by Competition Authority in a notice.
E) Third parties only learn about the preliminary investigation, if their involvement (data request, involvement in the procedure) is necessary.
2.2What powers does the competition authority enjoy in the context of a preliminary investigation?
A) The Competition Authority's investigative powers in the preliminary phase are not as extensive as they are during a competition supervision procedure.For example, the Competition Authority may not conduct an unannounced on-spot investigation ("dawn raid"), and the Competition Authority may not impose a procedural fine on a party that refuses to answer or provides insufficient answers to a data request.
B) Formal complaint
The case handleris authorized to collect data, requiredto assess the formal complaint and may also hold hearings with the participation of the persons concerned; furthermore, the case handler may involve other authorities or experts to establish the facts of the case. Neither procedural fines may be imposed on persons concerned refusing to cooperate in the course of the procedure, nor may coercive measures be applied against them. (Section 43/G. subsection (4) of the Competition Act).
C) Informal complaint
When assessing an informal complaint, the Competition Authority may hear the complainant and the complainee, and may ask for further information.
2.3Must the competition authority start a preliminary investigation by means of a formal decision? If so, who is the addressee of this decision? Must the competition authority inform other bodies, entities, authorities, of its decision to launch a preliminary investigation? Is this decision published (publication of a press release, for example)? Is the press generally informed of such decisions?
A) The Competition Authority is not required to make a formal decision to starta preliminary investigation pursuant tothe Competition Act and theRules of Administrative Procedure.
B) During the preliminary investigation, the Competition Authority proceeds in its own jurisdiction, and is not required to inform or notify any other authority or administrative body.
The fact that a preliminary investigation has been startedis not made public, and no press release is published, and the press is not informed about it in any other way.
2.4Under which circumstances can competition authorities close a preliminary investigation? Is the investigation closed by a formal decision or an informal letter? Is the competition authority required to state the reasons for its decision to close a formal investigation? Are parties interested to the preliminary investigation (for instance, the complainant, the company under investigation or any affected third party) informed before the adoption of such decision and, where this is the case, are they given an opportunity to formulate observations? Is this decision made public? Can this decision be challenged (through appeal or annulment proceedings, for example)? If this is the case, before which authority/court and by who can this decision be challenged? What is the review standard applicable to the decision to close a preliminary investigation (marginal or extensive review)?
A) The Competition Authority has the following options to close a preliminary investigation: (i) the case handler may decide to initiate a competition supervision proceeding, or (ii) may refuse to initiate a proceeding or (iii) in lack of jurisdiction the Competition Authority refers the case to another authority. In cases of (i) and (ii) above, the Competition Authority decides, based on the investigation, whether intervention is necessary, i.e. whether a competition supervision proceeding shall be initiated.
B) Formal complaint
In case of a formal complaint, the case handler makes his or her decision by issuing an order, which must be delivered to the complainant in all cases and to the complainee only if it was involved in the procedure. The order sets out detailed reasons of the decision. However, the margin of discretion of the Competition Authority concerning the initiation of a procedure is wide, and it must only proceed when a violation can be reasonably presumed.
The complainant may seek legal remedy against an order, in which the case handler establishes that the conditions of initiating a competition supervision proceeding are not met. The applications for a legal remedy shall be decided by the Metropolitan Court in a non-litigious procedure. If the Metropolitan Courtdecides that the case handler's order, in which he or she decides not to initiate a proceeding, is violating the laws, it repeals the order and obliges the Competition Authority to order the opening of an investigation within thirty days (Section 43/H subsections (8), and (10)-(11) of the Competition Act). The Metropolitan Courtmakes an assessment ofthe application under the applicable laws. The court makes decision out of hearing, however it may hear the parties if needed, and the parties may submit observations to the court.
The court may only examine the legality of the Competition Authority decision. Thus, the court is bound to the facts established by the Competition Authority. The court may only assess the facts, established on the basis of the administrative decision, and new evidence/facts which were not established during the administrative procedure and/or are not contained in the order butwere only presented in the court proceeding may not be taken into consideration by the court.