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Hungary

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1) REFERENCES

Commission Opinion COM (97) 2002 final - Not published in the Official Journal
Commission Report COM (98) 700 final - Not published in the Official Journal
Commission Report COM (99) 505 final - Not published in the Official Journal
Commission Report COM (2000) 705 final -Not published in the Official Journal
Commission Report COM (2001) 700 final - SEC (2001) 1748 - Not published in the Official Journal
Commission Report COM (2002) 700 final - SEC (2002) 1404 - Not published in the Official Journal
Commission Report [COM(2003) 675 final - SEC(2003) 1205 - Not published in the Official Journal]
Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its July 1997 Opinion, the European Commission considered that, with the adoption of the new Competition Act in Hungary, significant progress had been made towards the approximation of legislation on restrictive agreements between undertakings. However, as far as State aid was concerned, much more needed to be done to achieve the degree of transparency required. The Commission took the view that the role and powers of the monitoring authority needed to be clearly defined to ensure that aid granted is compatible with Community rules. A considerable effort was needed in the medium term to meet the requirements concerning State aid. Close cooperation with the Commission was deemed necessary in this area.

The November 1998 Report noted that steady progress had been made in bringing legislation on restrictive agreements into line with the Community rules. In the field of State aid, further efforts were required to make the procedures for granting aid transparent, with a view to establishing a comprehensive and up-to-date inventory of State aid measures. The legal framework for granting State aid was still not in line with Community law, and the State aid monitoring authority should be given greater powers for monitoring aid measures.

The October 1999 Report found that Hungary had progressed in the State aid field but should have completed incorporation of Community rules into national legislation. Special attention should be given to the legal basis for the scrutiny of aid granted to sensitive sectors and to the adjustment of state monopolies.

The November 2000 Report found that Hungary had made significant progress in the field of competition and had continued to broaden the application of the acquis. With regard to State aid, the Government had adopted a general working programme and had set up an interministerial advisory committee to help the authorities incorporate the acquis. However, an inventory of State aid remained to be made.

The November 2001 Report recognised that Hungary had continued to progress in the application of the Community acquis. The revised State aid system, which came into force on 1 January 2002, generally banned the granting of public funding by the local authorities. The enhanced performance of the State aid Supervisory Authority led to a more specific application of the rules and the drawing up of the State aids inventory.

The October 2002 Report found that Hungary had made steady progress; however, much remained to be done in order to abolish State aid schemes incompatible with the acquis.

The November 2003 Report states that Hungary is meeting its commitments regarding competition. It must continue, however, to amend its legislation, especially in the area of taxation.

COMMUNITYACQUIS

European Community rules on competition stem from Article 3(g) of the EC Treaty, which states that the activities of the Community shall include "a system ensuring that competition in the internal market is not distorted". The main areas of application are restrictive agreements and State aid.

The Europe Agreement with Hungary, which came into force on 1 February 1994, provides for a competition regime to be applied in trade relations between the Community and Hungary based on the requirements set out in Articles 81, 82 and 87 of the EC Treaty (ex-Articles 85, 86 and 92) concerning agreements between undertakings, abuses of dominant position and State aid, and for implementing rules in these fields to be adopted within three years of the entry into force of the Agreement.

Furthermore, the Agreement requires Hungary to make its rules on competition compatible with those of the Community.

The White Paper refers to the progressive application of the above provisions and of those contained in the Merger Regulation (4064/89) and Articles 31 (ex-Article 37) and 86 (ex-Article 90) concerning monopolies and special rights of the EC Treaty.

EVALUATION

As regards restrictive agreements between undertakings, Hungarian legislation is to a large extent compatible with existing Community law: regulations on vertical restrictions and horizontal cooperation agreements and provisions to combat restrictive agreements came into force in April 2002. The Competition Office which effectively ensures compliance with the legislation has a good enforcement record. However, a policy of dissuasive penalties for restrictive agreements, which seriously distort competition, should be introduced.

In the State aid field, the new legislation, which came into force in January 2002, is a significant step forward. However, it does not comply fully with the acquis, in particular with regard to certain tax aid schemes, which need to be aligned with the acquis. Hungary benefits from a transitional arrangement to phase out certain individual tax aid measures for offshore companies (by 31 December 2005), SMEs (by 31 December 2011) and local businesses (by 31 December 2007).

Since the 1977 Commission Opinion, Hungary has made steady progress with regard to antitrust laws but it should endeavour further to align its legislation on tax aid schemes. However, negotiations on this chapter are continuing.

This summary is for information only and is not designed to interpret or replace the reference document.

Last updated: 05.03.2004
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