Hungary: Reduced red tape in merger control proceedings

The amendments to the Competition Act introduced some welcome changes. Businesses will welcome the fact that the merger control thresholds have been increased so that merger control clearance is now mandatory only if two undertakings each record a Hungarian net turnover of more than Ft1 billion (approximately €3.2 million) in the preceding year (although the new concept of a "voluntary filing may apply to undertakings that do not meet these thresholds, as discussed below). Together with the new filing form and merger control guidelines, the increased thresholds should make Hungarian merger control proceedings easier for concentrations from January 15 2017.

SIMPLIFICATION OF MERGER CONTROL

The new filing form includes no questions relating to Phase II investigations. In the event that a merger significantly affects overlapping or related markets, the parties are free to explain their views and arguments as they deem relevant and are not bound to answer the long list of questions included in the previous filing form (Sections VII and VIII of the previous form). If the HCA commences a Phase II investigation and is dissatisfied with the information provided via the form – in particular, because the parties have not refuted its competition concerns – the HCA may request further information that it considers necessary to assess the transaction. In the course of the consultation with the HACL, the HCA explained that the exact reason behind this change was to shift the task of data specialisation to the HCA, instead of requiring a comprehensive list of information from the applicants in each proceeding.

Furthermore, the new filing form (as well as the guidelines on best practices in relation to the filing form) contains numerous practical changes aimed at easing the procedure. For example, copies of the merger contract and other annexes to the filing (except for the power of attorney) may be submitted without obtaining notarisation or other authentication. Further, turnover data regarding the participant groups is requested in aggregate figures and does not have to be as detailed as under the old regime.

In addition to the guideline supplementing the filing form, the HCA has issued other guidelines covering several practical topics, such as:

• pre-notification meetings;
   
• conditions and obligations imposed in clearance decisions; and
   
• procedural guidance.

These clarify the HCA's legal interpretations and help participants to understand its expectations for merger control proceedings.

NOTIFICATION OF NON-NOTIFIABLE MERGERS

One of the least-welcomed changes of the amended Competition Act is the so-called 'merger investigation threshold', which concerns mergers that do not meet the thresholds of a mandatory filing (see above) to be notified. This applies if:

• it is not evident that the merger in question does not significantly restrict competition on the relevant market; and
   
• the total Hungarian net turnover of the participants exceeded Ft5 billion (approximately €16 million) in the previous business year.

The HCA guidelines and the clarifications it provided during the consultation with the HACL help to interpret this interim category of mergers.

According to the guidelines, it is evident that a concentration does not significantly impede competition in the relevant market (meaning that notification is not necessary) if the participants' aggregate market share does not exceed:

• 20% in case of horizontal overlaps; or
   
• 30% in case of vertical relationships.

During the consultation, the HCA explained that even if these thresholds are exceeded, the HCA does not invite filings (neither intend to initiate investigations) so long as the concentration does not create or significantly strengthen a dominant position in the relevant market.

COMMENT

The Competition Act amendments expressly aim to reduce administrative burdens and shorten the duration of merger control proceedings, and this goal is supported by the updated filing form and the new guidelines. It is hoped that the HCA will continue its recent – and welcomed – trend of simplifying and speeding up merger control proceedings and clarifying the obligations of merger participants.