Smashing Pumpkins: Interventions to the Economy in Hungary, From a Competition Policy Perspective

Abstract

In a previous article, I described the actual mishaps in competition regulation in Hungary. The newly elected Hungarian Government introduced very protectionist rhetoric followed by similar actions. In this article, I will show some of the actions of the government and look at how this relates to mainstream competition policy thinking. The Government began a large-scale redirection of the economy as Hungary was on the verge of bankruptcy. This redirection involved several contested decisions, such as: Erzsébet utalvány (cafeteria vouchers system); lex MOL; and statutory price drops for utilities. For a long time, Hungarian competition policy was regarded as one of the best among countries with newly introduced competition legislation. This was a result of the legacy of the first few leaders of the Hungarian competition authority, who could achieve large-scale real independence for the authority. The leaders of the competition authority changed after the election of the new government in 2010. There was a large turnover of former competition authority too. These departures left the new President and his team with the responsibility to recalibrate the authority. The staff that was hired around that time now hold leading positions within the national competition authority. Skimming through the case law we see several protectionist measures that make it difficult to navigate the Hungarian competition policy landscape. In a previous article, I highlighted the difficulties arising from the first few interventions by the Hungarian government. In this article, I will elaborate on the issue that draws a clear, systematic system of national protectionist measures.