The EU Single Market allows people, goods, services and capital to move freely around the EU. This means that EU citizens can have a greater choice of products and benefit from better prices. European businesses – small and large – can expand their customer base and exchange products and services more easily across the EU.
The Commission is concerned that the Hungarian legislation on retail does not comply with EU rules and deprives consumers and businesses of the full benefit of the Single Market. It considers that the Hungarian law infringes the principles of free movement of goods (Article 34 of the Treaty on the Functioning of the EU, TFEU) as well as the EU Regulation establishing a common organisation of the markets in agricultural products (Regulation 1308/2013):
Under the Hungarian law, retailers have to apply the same profit margin to agricultural and food products irrespective of their country of origin. This rule violates EU law on the free movement of goods (Article 34 of TFEU) as it discourages sales of imported products in comparison to domestic ones.
Hungary fails to fulfil its obligations under Regulation (EU) No 1308/2013 by undermining the free formation of selling prices of agricultural products on the basis of fair competition. The Hungarian law obliging the same profit margin to all products prevents some importers and retailers of imported goods from offering more attractive retail prices to consumers.
The Commission opened the infringement proceedings against Hungary in February 2017 by sending a letter of formal notice. The letter was followed by a reasoned opinion issued in March 2018, where the Commission called on Hungary to remove its retail restriction. Since the Hungarian authorities have maintained their position, the Commission has now decided to refer the case to the Court of Justice of the EU.
Retail is a key sector in the EU economy – there are about 3.6 million companies active in the retail sector, representing 4.5% of value added and accounting for almost 9% of EU jobs. Retail is also essential for consumers – EU households spend up to one-third of their budgets in retail shops.
Imposing restrictions that mainly affect foreign retailers undermines their ability to operate their business in a way that best meets consumers' demands. It reduces the choice of products consumers can buy and hampers the opportunities offered by the EU Single Market to businesses.
To support Member States' efforts to create a more open, integrated and competitive retail sector the Commission recently published a Communication proposing a set of best practices. The Commission encouraged Member States to make sure rules applying to retail are non-discriminatory, justified and proportionate and allow business to face the challenges of the 21st century.
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