Exceptions and Exemptions to Competition Law: the case for flexibility in developing countries and transition economies Istanbul, 31 July 2006 BELÉNYI Andrea Gazdasági Versenyhivatal

2 Outline Short history of the Hungarian competition legislationShort history of the Hungarian competition legislation The Hungarian competition actsThe Hungarian competition acts Exceptions, exemptions in the Hungarian systemExceptions, exemptions in the Hungarian system GVH decisionsGVH decisions OECD - Hungary RCC in BudapestOECD - Hungary RCC in Budapest

Gazdasági Versenyhivatal3 History of the Hungarian competition legislation Act No. V of 1923 on Unfair CompetitionAct No. V of 1923 on Unfair Competition Act No. XX of 1931Act No. XX of 1931 Act No. IV of 1984 on the Prohibition of Unfair Economic ActivitiesAct No. IV of 1984 on the Prohibition of Unfair Economic Activities Act No. LXXXVI of 1990 on the Prohibition of Unfair Market PracticesAct No. LXXXVI of 1990 on the Prohibition of Unfair Market Practices Act No. LVII of 1996 on the Prohibition on Unfair and Restrictive Market PracticesAct No. LVII of 1996 on the Prohibition on Unfair and Restrictive Market Practices Amendments of the Competition Act in 2000, 2003, 2005Amendments of the Competition Act in 2000, 2003, 2005

Gazdasági Versenyhivatal4 Earlier stage ( ) Changes in the economyChanges in the economy Transitional periodTransitional period Privatisation – no role of the GVHPrivatisation – no role of the GVH Liberalisation – role of the GVHLiberalisation – role of the GVH Competition advocacyCompetition advocacy Competition cultureCompetition culture Few cases, less enforcement activityFew cases, less enforcement activity

Gazdasági Versenyhivatal5 Conclusion I. Without a well-established market economy the competition authority can use the tools of advocacy (to influence the decisions of the government) and development of competition culture (to teach the business sector).

Gazdasági Versenyhivatal6 Later stage ( ) 1996 – the second stage of the changes, preparation to the EU accession1996 – the second stage of the changes, preparation to the EU accession Functioning market economyFunctioning market economy Can regulation create competition?Can regulation create competition? Can regulation influence the conditions of competition?Can regulation influence the conditions of competition?

Gazdasági Versenyhivatal7 Conclusion II. In a functioning market economy the three pillars of competition policy (enforcement-advocacy-competition culture) can be used effectively. In the field of advocacy activity – market opening – telecom, energy, rail. Competition culture – education, judges.

Gazdasági Versenyhivatal8 Enforcement Decisions of the GVH Multipoint card case – individual exception with conditionsMultipoint card case – individual exception with conditions Negative clearance case in the telecommunications sectorNegative clearance case in the telecommunications sector A cartel case – teamingA cartel case – teaming

Gazdasági Versenyhivatal9 Case 1 individual exception (2001) Three huge Hungarian companies – fidelity programme with a bankcard (not only collecting the units, but the card can be used for paying, too)Three huge Hungarian companies – fidelity programme with a bankcard (not only collecting the units, but the card can be used for paying, too) Final decision with conditions and exempted for a short period (fulfils the 4 conditions)Final decision with conditions and exempted for a short period (fulfils the 4 conditions) Fidelity market – not common in Hungary at that time, but the companies are strong at their own marketsFidelity market – not common in Hungary at that time, but the companies are strong at their own markets

Gazdasági Versenyhivatal10 Case 2 a negative clearance in the telecom market (2004) Parties – two Hungarian mobile operators and a third companyParties – two Hungarian mobile operators and a third company The aim of the agreement – to establish a payment service system used by mobile customersThe aim of the agreement – to establish a payment service system used by mobile customers Agreements – company control and serviceAgreements – company control and service The decisions of the board (4 out of 5)The decisions of the board (4 out of 5) Not independent companies – no restrictive agreementNot independent companies – no restrictive agreement

Gazdasági Versenyhivatal11 Case 3 hard-core cartel – IT sector (2004) Public procurement cartel case – Ministry for Education, 4 universities and 5 IT companiesPublic procurement cartel case – Ministry for Education, 4 universities and 5 IT companies Restrictive agreements – market sharingRestrictive agreements – market sharing Complex tender – Software for accounting, filing, clearing and hardware and service for theseComplex tender – Software for accounting, filing, clearing and hardware and service for these Teaming agreement – for common R&DTeaming agreement – for common R&D Does it fulfil the 4 conditions?Does it fulfil the 4 conditions? Down raid – documents, sDown raid – documents, s

Gazdasági Versenyhivatal12 Conclusion III. In a well-established and well- functioning economy sophisticated competition policy tools can be used. ExceptionsExceptions Block exemptionsBlock exemptions RemediesRemedies

Gazdasági Versenyhivatal13 If you have enough experiences and resources - why not to contribute the authorities in the region?

Gazdasági Versenyhivatal14 OECD-Hungary Regional Centre for Competition in Budapest Vivid cooperation between the founding institutionsVivid cooperation between the founding institutions Created in 2005Created in 2005 The main aimThe main aim FunctioningFunctioning Target countriesTarget countries Seminars, workshops, conferencesSeminars, workshops, conferences

Gazdasági Versenyhivatal15 Organigram President Vice President Competition Council Comp Policy International Competition Culture Centre Press, HR Accounting Services Industry/Agr Infocoms Cartels Cons Protect Legal Secretary-general

Gazdasági Versenyhivatal16 More Information and Contact Annual ReportsAnnual Reports OECD country reportsOECD country reports Laws, decisions, reports, notification forms, etc. Gazdasági Versenyhivatal (the Hungarian Competition Authority) H-1245 Budapest, 5, Pf.: 1036

Gazdasági Versenyhivatal17 The End Thank you for your attention!