The Hungarian Competition Authority (GVH) issued a statement recently on changes in its method to establish the amount of fines. The bottom line is that companies can expect heavier fines but the authority is willing to offer many options to reduce the fines.
According to the statement, the basis of the fines imposed for restrictive covenants (such as cartels, vertical agreements or unlawful decisions of alliances and chambers) or abuse of dominant positions will increase by three times.
The main principle in establishing the amount of fines in consumer cases will not change so that the GVH will still use the advertising costs of the unlawful business practice as a primary benchmark. However, in case this figure does not adequately reflect the extent of the breach, then the turnover realised by such unlawful practice will determine the amount of the fine. As a thumb rule, the GVH used to impose up to 5% of such turnover as fine in these cases; this rate will increase to 10%.
It will be the primary objective of the authority to encourage companies to co-operate with them in the course of investigations. The policy of being lenient towards voluntary confession of breaches has already been a significant element of the authority’s proceedings: whistle-blowers and voluntary confessors have been rewarded with up to 50% reduction of fines. Henceforth, the GVH will reward companies who waive their rights to appeal against the authority’s verdicts with up to additional 10-30% reduction of fines in the course of so-called settlement procedures. Furthermore, the authority emphasizes the reparation of damages caused by the breach. Companies that voluntarily indemnify all parties concerned by the breach may deduct the costs of indemnification from the amount of the imposed fine.