Amendment of the Hungarian Competition Act before the Constitutional Court

The President of Hungary sent the amendment of the competition act to The Constitutional Court of the Republic Hungary for a so-called preventive review of unconstitutionality. The issue was the following:

The amendment to the competition act prescribed a new sanction for specific infringements (basically hard-core cartels). The sanction would be basically something you would call under UK law ‘director disqualification’ and would last for two years. The precondition for the application of the rule is twofold: 1) you must have a binding decision of the competition authority or a court on the competition law infringement; 2) the authority than adopts an injunction (order) that can be appealed.

The President of Hungary decided to refer the act to the Constitutional Court due to the following reasons:
The Hungarian Constitution guarantees the right to access to courts in criminal and civil cases in conformity with the European Convention of Human Rights. An other important right guaranteed by the constitution is the presumption of innocence. This is valid for preventive-repressive sanctions. The amendment to the competition act prescribes a sanction that is very similar to a sanction prescribed in the Criminal Code (suspension of licence/from profession). Although the sanction in the amendment is not criminal in a technical sense, but from a basic constitutional point of view it can be treated by analogy as a criminal like sanction. So the amendment is unconstitutional because it infringes the right to fair procedure/trial due to the fact that the order of the competition authority can be appealed only in an out-of-court proceeding (with no possibility for oral defence; only written submissions are allowed). This in itself infringes the principle of right to fair trial and the principle of equality of arms, since witness statements might have a very important role in such proceedings. Moreover, the amendment also infringes the constitutionally protected presumption of innocence due to the fact that there is no investigation by the competition authority whether a specific director was directly involved in the adoption of an unlawful practice, but the authority will automatically order an injunction against every director (executive officer) in the registry of companies. So the executive officer of the company has to prove his/her innocence by proving that he/she was not involved in adopting the unlawful act.

Comments: The problem with the reference to the Constitutional Court is that it delays the entry into force of other important provisions of the amendment. The preparation works lasted for more than a year and there have also been comments previous to the adoption of the amendment about the possible unconstitutionality. Whatever the outcome of the possibly long procedure is, several important streamlining provisions have been delayed.


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