Short Rules on Price Reduction Campaign in Hungary

The price reduction campaigns are primarily regulated by Hungarian Consumer Protection Act (“CPA”) and in details by the Hungarian Price Decree (“Decree”) in line with the so-called Omnibus Directive implemented in the Member State of the European Union (“Omnibus Directive”). These special price reduction rules of the Hungarian regime are only applicable in case of products where the price reduction itself is announced.

These regulations themselves do not categorise the price reduction campaigns, however, there are some manuals and information guides issued by Hungarian government bodies for the application of the CPA and the Decree which draw up the following most common types of price reduction campaigns:

• “Open to all” price reductions (price reductions which are automatically or easily available to anyone i.e. such as coupon days, discount codes available to any consumers without restrictions);
• Progressive price reductions (i.e. a gradual, progressive reduction of the price applied to a product without any interruption by a price increase);
• Introductory price reductions (i.e. a new product is sold on an introductory price).

There are also types of offers that are not recognised as price reductions, therefore, the price reduction rules of the Decree would not be applicable in the following cases:

• Price comparison campaigns (i.e. where several retailers’ prices are compared to each other);
• Conditional or personalised offers (i.e. where the price reduction is not automatic, but a condition must be fulfilled) such as:

1. Linked/bundled conditional offers (i.e. two or more products are sold together in a campaign where the bundled products are not designated such as “buy 3, the cheapest is for free”, etc. – however, exemptions might apply);
2. Personalised offers (i.e. personalised discounts for individuals or a smaller defined group of consumers such as individual vouchers, unique discount codes, loyalty coupons available exclusively to a designated consumer group).

The general consumer protection requirements equally prevail in case of price reduction campaigns, therefore, communication concerning price reduction must be clear, visible, legible and complete and must not be misleading or aggressive.

In addition, by virtue of the Decree, communication concerning price reduction campaigns must include at least:

• The reduced “new price” (i.e. the reduced price applied during the price reduction campaign) and
• The “previous price” (i.e. the previously applied price of the said product, please see its requirements in question no 4).

Price reduction requirements do not cover goods which are liable to deteriorate or expire rapidly (typically food).

Further requirements may vary based on the type of the price reductions display chosen by the retailer. Please see the detailed rules for price display in question no 4.

No specific limitations, however, the general consumer protections rules must be complied with.

There are several requirements that prevail with regard to the price display.

Generally, all prices in a price reduction campaign (including the “new price” and the “previous price”) must meet the following main requirements:

• Displaying the selling price;
• Displaying the unit price (where relevant);
• Including VAT and other taxes; and
• Being in Hungarian forint (HUF).

Pursuant to the Decree, the “previous price” shall be determined by the lowest price actually applied by the retailer through the same sales channel (e.g. shop, website or application) during a period of at least 30 days preceding the starting day of the price reduction campaign. Special rules apply for progressive price reductions and the introductory price reductions.

For progressive price reductions:

• The “previous price” shall be determined by the principles of the above outlined 30-day rules, nonetheless, the starting day for the 30 days calculation is the first day of the whole progressive price reduction campaign, not, each individual reduction.

For introductory price reductions:

• In the case of a newly marketed product that has been on the market for less than 30 days, the requirements set out above shall apply for a period of at least 15 instead of 30 days;
• In the case of a newly marketed product that has been on the market for less than 15 days, price reduction communication is not allowed (i.e. during the first 15 days).

Similarly to other areas of business, retailers must respect general competition rules and must not engage in unfair competition or business-to-consumer practices.

The rules of the Decree on price reduction are primarily assessed under the relevant consumer protection regulation, as is investigated by the general consumer protection authorities. Nonetheless, should the price reduction also trigger unfair business-to-consumer practices or unfair competition law risks it is possible that such price reduction to be investigated by the Hungarian Competition Authority (“HCA”) within its competences.

The Consumer Protection Authority has a number of options to remedy the infringing situation, including ordering the cessation of the infringing conduct, or prohibiting the continuation of the infringing conduct. In addition, it may also impose a financial penalty (fine) on the retailer for non-compliance with the rules of pricing reduction campaigns.

The general consumer protections authorities will act under the CPA’s provisions on the imposition of fines for breaches of pricing rules. The minimum amount of this fine is HUF 15 thousand (approx. EUR 39), while the maximum is 5 % of the net turnover of the retailer generated in the preceding financial year but not more than HUF 2 billion (approx. EUR 5.2 million).

In case of the Hungarian Competition Authority’s proceedings, where the infringement of general competition law requirements is investigated, the maximum amount of fine is 10 % of the net turnover of the company group generated in the preceding financial year.