Rule of Law Challenges and the Enforcement of EU Competition Law a Case – Study of Hungary and Its Implications for EU Law

Abstract

For the first time in its history the EU is facing a serious challenge of its Member States’ commitment to the rule of law. The financial crisis brought to light the vulnerability of the neo-liberal economic model and national strategies globally shifted towards more inward-looking policies challenging the fundamental ideas of free trade and market competition. The economic downturn corroded the legitimacy of democratic regimes and populist appeals gained ground. The impact of these developments on economic regulation and competition law enforcement has been significant in and outside of the EU and its Member States. Rising populism and economic nationalism both in the US and in the EU raised fundamental questions on how competition law and its enforcement should form part of the democratic process.

Politicising the competitive process in order to support national economic interests has been widespread practice of the Hungarian government since winning the elections in 2010. The drastic re-transformation of the constitutional system has fabricated a framework for economic regulation where accumulation of political power has resulted in accumulation of economic power. The new framework of economic governance systematically undermined key legal rules and independent institutions of the functioning Hungarian market economy. The rate and scope of constitutional re-engineering of Hungary´s economic governance framework and most notably the enforcement of competition rules pose questions beyond the Hungarian context on the current interplay of politics, law and economics as well as on the role of markets, states and the competitive process in EU competition law and policy.

The aim of the paper is to critically analyse the way “rule of law backsliding” has tarnished the young but effective competition law enforcement that developed in Hungary in the period after 1989 and analyse its broader implications for the (decentralised) enforcement of EU competition law. Using Hungary’s example, the paper aims to demonstrate the relevance of promoting democracy and rule of law values as a goal of competition law as well as competition law as a fundamental institution of a democratic system.

Keywords: rule of law, EU law, competition law enforcement, Hungary

JEL Classification: K2, K4, K21, K23, K33, K42