In a judgment handed down on Thursday, 18 June, the Court of Justice of the EU (CJEU) found that Hungarian legislation imposing mandatory discounts on large retailers goes against European Union law (Case C-658/24).
In Hungary—in the context of Russia’s military aggression against Ukraine—the previous ‘Orbán’ administration introduced, in May 2023, a scheme involving mandatory price reductions in order to fight the inflation of food prices. Retailers whose turnover exceeded €2.5 million were required to apply a retail price that was at least 15% lower than the lowest price applied during the preceding 30 days, and they had to have minimum quantities in stock during the specified mandatory promotional period.
Penny Market, a retailer owned by the German group REWE, challenged the fine that the Hungarian authorities had imposed on it on the grounds that some products (apples, mineral waters) were not on the shelves on the day of the inspection. The company cited a delay in delivery and argued that substitute products were available.
In its judgment, the Court of Justice takes the view that the Hungarian legislation infringes the regulation (1308/2013) on a common organisation of the markets in agricultural products (CMO Regulation) as well as the directive (2006/123) on services in the internal market.
According to the CJEU, the Hungarian legislation undermines fair competition, a fundamental component of the CMO Regulation.
The European court also does not consider the disputed measures to be proportionate, since they do not pursue the stated objectives, such as protecting disadvantaged consumers, in a consistent and systematic manner. In fact, the traders targeted [by these measures] are generally located in cities—making the imposed discounts difficult for disadvantaged consumers living in rural areas to access.
Furthermore, it falls to the Hungarian court to determine whether the contested scheme indirectly discriminates against companies whose headquarters are located outside Hungary, since Hungarian retail chains are able to be exempt from the legislation because they are structured as franchises, which allows them to not combine their turnover and thus not exceed the minimum threshold required [for the legislation to apply].
See the judgment of the Court of Justice: https://aeur.eu/f/mfb (Original version in French by Mathieu Bion)