The Hungarian Competition Authority (GVH) is intensifying its actions to mitigate rising food prices. GVH President Csaba Balázs Rigó has sent warning letters to several trade associations representing producers and processors of essential food items. The authority believes that the regular announcements of price increases by these associations could violate fair market competition and exacerbate inflationary pressures.

It has become a common practice among various food industry associations to issue statements suggesting that price increases for certain products are necessary. Some of these statements specify the percentage or nominal amount of proposed price hikes for essential food items.

President Rigó highlighted that such practices could lead to uniform pricing and increase inflationary pressure. He pointed out a presumed causal relationship between the rising prices of essential foods and the associations' periodic announcements advocating for price increases. This coordinated approach could potentially fall under competition law, especially in an inflationary market environment, leading to a coordinated pricing strategy that contradicts the criteria for independent market decision-making.

According to Rigó, the starting point for assessing agreements between businesses under competition law is that companies must make their market decisions independently, without coordinated behavior with competitors. Public statements and announcements made by trade associations regarding future price increases and their suggested levels, which may include specific pricing strategies, likely violate sections 11 (1) and (2) of the competition law.

As a result, the GVH President has suggested a review and modification of the information exchange and announcement practices among food market associations to ensure they promote competition and do not lead to coordinated price increases, which could significantly raise consumer prices.

The warning letter does not imply a determination of a legal violation. Its purpose is to signal concerns regarding the described market behavior to encourage compliance. The addressed parties have the opportunity to respond voluntarily within 60 days, indicating what steps they have taken or plan to take to restore compliant behavior.

However, the warning letter could also be a factor in aggravation if the prohibited behavior does not cease and the GVH takes action within its jurisdiction. If proven in a competition supervision procedure that the entity engaged in unlawful conduct, it could face significant fines, up to 13% of the previous year's net revenue.

The provisions regulating the warning letter mechanism came into effect on January 1, 2023. In 2024, the GVH President utilized this tool in 53 cases.

The national competition authority continuously monitors market processes in various product chains to protect Hungarian consumers while considering the interests of domestic businesses. The GVH is prepared to intervene if necessary, particularly in the dairy product market, and its online price monitoring system may soon expand to include additional product categories to help keep food prices in check.