For international investors, acquiring or establishing a business in Hungary involves more than negotiating commercial terms. Mergers, acquisitions, and joint ventures may require approval from the Hungarian Competition Authority (“HCA”) before they can be completed. Failure to comply with merger control rules can result in significant fines, delays, or even the prohibition of a transaction.
As Hungarian competition law is closely aligned with European Union legislation, understanding the merger control regime is an essential part of transaction planning.
When Is a Merger Subject to Review?
Merger control is governed by the Act LVII of 1996 on the Prohibition of Unfair and Restrictive Market Practices (the Competition Act). The purpose of the regime is to ensure that economically significant transactions do not substantially reduce competition in the Hungarian market.
When reviewing a transaction, the HCA examines whether it is likely to significantly impede effective competition, particularly through the creation or strengthening of a dominant market position. Where competition concerns can be addressed through appropriate commitments, the authority may approve the transaction subject to conditions or commitments.
The subject of the notification
In Hungary, a transaction shall be notified to the HCA if it qualifies as a concentration and the turnover thresholds applicable to the undertakings concerned are met. A concentration of undertakings arises where (i) two or more previously independent undertakings merge, one undertaking is absorbed into another,or (ii) an undertaking or undertakings jointly, acquire, directly or indirectly, control over an undertaking independent of it, or (iii) several independent undertakings jointly establish an undertaking under their joint control which is capable of performing, on a lasting basis, all the functions of an autonomous undertaking.
Hungarian Notification Thresholds
Under Section 24 of the Competition Act, a merger must generally be notified to the HCA where the combined Hungarian net turnover of the undertakings concerned exceeded HUF 20 billion in the preceding financial year and at least two groups of undertaking concerned has Hungarian turnover exceeding HUF 1.5 billion.
The HCA may also review certain transactions falling below the mandatory thresholds where the combined Hungarian turnover exceeds HUF 5 billion and the transaction may significantly lessen competition. Businesses may voluntarily notify such transactions to obtain legal certainty.
The Value of Pre-Notification
Before submitting a formal notification, it is advisable to enter into pre-notification discussions with the HCA. These consultations help clarify the scope of information required, identify potential competition issues, and resolve procedural questions before the review officially begins.
A well-prepared pre-notification process often reduces administrative burdens, shortens review times, and minimises the risk of requests for additional information.
Planning Ahead Reduces Regulatory Risk
Competition law should be considered from the earliest stages of every transaction. Due diligence should include an assessment of merger control requirements, potential competition concerns, information-sharing protocols, and any restrictions on coordinating commercial activities before closing.
Early legal advice enables businesses to identify potential regulatory issues, structure transactions efficiently, and avoid unnecessary delays or enforcement action. By integrating merger control considerations into transaction planning, investors can complete acquisitions with greater certainty while ensuring full compliance with both Hungarian and European competition law.