Amendment of the Hungarian competition Act

19 August, 2011

 

The Hungarian Competition Act (Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices (further on: HCA) was amended in July 2011 with Act Nr. CXV of 2011. The amendments touched upon the deadlines, changing the previous calculation of working days to calendar days. It also introduced special rules for economic organisations defined as having special importance regarding the national economy (further on: economic organisation having special importance). The special rules are that the application for authorisation has to be submitted within a shorter time period. But the most important change is that there is a new provision prescribing that in the case of concentrations concerning economic organisations having special importance, the undertaking acquiring control may before receiving the authorisation of the Gazdasági Versenyhivatal, the Hungarian Competition Authority, exercise its controlling rights to the extent that it is necessary to continue the ordinary course of business. This can be limited by the Gazdasági Versenyhivatal.

The amendment of the Competition Act seems to change the tacit understanding of the legal professionals that there was no suspension period in Hungarian merger control. By explicitly saying that there is no suspension period in the case of economic organisations having special importance, the amendment suggests that otherwise there is one. This might have several implications on the work of the law firms in Hungary due to the fact that they might have to change the advising practice.

Below you can find a raw first translation.

Act Nr. CXV of 2011

Article 8 (1) Section 4 shall be added as stated below to Article 28 of the Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices (further on: HCA):

(4) In the case of a concentration in the form of change or acquisition of control of the economic organisation or part of it which is a result of the liquidation of an economic organisation defined as having special importance regarding the national economy (further on: economic organisation having special importance) according to Article 65 of the Act XLIX of 1991 on Bankruptcy and Liquidation Proceedings, the application for authorisation has to be submitted within 15 days after – whichever is earlier – the publication of public offer, the contract or the acquisition of control.

(2) The HCA shall be amended with Article 29/A as follows:

Article 29/A (1) In case of a concentration within the meaning of Article 28 paragraph (4), Article 29 shall be applied with the exception that the undertaking acquiring control may before receiving the authorisation of the Gazdasági Versenyhivatal exercise its controlling rights to the extent it that it is necessary to follow the ordinary course of business.

(2) If according to Article 28 paragraph (4), during the authorisation procedure of a concentration, the sitting Competition Council decides to apply Article 63 paragraph (3) b) according to Article 63 paragraph (4), then in order to preserve the conditions of efficient competition or to mitigate the harmful effects on competition – with regard to the interest of the undertakings and the taking into consideration as far as possible the interest in continuation of the daily business activity – the controlling powers may be simultaneously restricted, subjected to conditions or commitments (further on together as restriction on control) until the final decision. Any transaction violating the ban on exercising control shall be deemed as void.

(3) Article 30 of the HCA shall be amended with paragraph 6 as follows:

(6) When deciding on the application for authorisation of a concentration within the meaning of Article 28 paragraph (4), account shall also be taken of the competitive effects arising due to the use of controlling rights according to Article 29/A paragraphs (1) and (2). In its decision the Gazdasági Versenyhivatal shall also state whether the exercise of the controlling powers by the acquirer of control was in compliance with Article 29/A and with the restrictions imposed by the decision on the restriction on the controlling powers.

(4) Article 63 paragraph (3) of the HCA shall be amended as follows:

(3) In the course of the control of a concentration by undertakings the resolution concluding the proceeding shall be adopted after the receipt of the complete application or the completion of the application, the time limit starting on the following day,

a) within 45 days, where

aa) there is no concentration pursuant to Articles 23 or 25, or

ab) the thresholds in Article 24 are not reached, or

ac) granting authorisation for the concentration may clearly not be refused pursuant to Article 30 paragraph (2);

b) in cases not mentioned in point a)

ba) in a case according to Article 28 (4) within 3 month,

bb) in all other cases within four month.

shall be adopted.

(5) Article 63 paragraph (6) of the HCA shall be amended as follows:

(6) The time limit for the execution period in duly justified cases may be prolonged:

a) in cases according to paragraph (2) a) twice with maximum two month each time,

b) in cases according to paragraph (2) b) twice with maximum six month each time,

c) in cases according to paragraph (2) c) with maximum two month,

d) in case according to paragraph (3) a) with 20 days,

e) in case according to paragraph (3) ba) with maximum 20 days,

f) in case according to paragraph (3) bb) with maximum two month.

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