OREANDA-NEWS. October 04, 2010. Zoltan Nagy, the Chairman of Hungarian Competition Authority (GVH), gave a presentation “Regulating Retail Market in the Republic of Hungary. Experience of Hungarian Competition Authority” at the workshop “On Competition Issues in Retail Trade”, reported the press-centre of FAS Russia.

Mr. Nagy told the audience about the main features of Hungarian FMCG sector. According to GVH President, this sector is experiencing tough competition and has many mid-size players. There is trend towards reducing the number of sellers and increasing the power of private brands.

Mr. Nagy also thinks that Hungarian FMCG sector is facing considerable intensification of completion between local, multinational and private brands. “Due to producer consolidation, some brands can lose their market share. We are certain increase in supplier concentration and increasing quantity and price segmentation of the goods”, said Mr. Nagy.

GVH President outlined the existing problems in relations between producers and sellers of food products. They are typical for the market of agricultural products, which has a bipolar economic structure and the number of production associations went down considerably. In Hungary large retail networks and their suppliers display strong power asymmetry; at the same time, no retail network has dominant position.

“Certainly a pressing issue in development of retail sector is the producer–seller problem, when the seller is able to dictate conditions and the producer is forced to accept them”, believes Mr. Nagy.

In 2001 Hungarian Parliament drafted a decree to protect small and medium agricultural producers.

In 2006 Hungary passed the law on trade, which introduced considerable changes in regulation of abusive behavior of retailers that possess significant market power in Hungary.

GVH President pointed out that the law listed nine typical violations, including, in particular, unreasonable discrimination of suppliers or unfair conditions of risk distribution imposed upon suppliers.

“The 2009 Law on supplies of food products, the so-called Food Networks Code, was aimed at establishing the most loyal regime towards domestic products in comparison with the goods produced in the EC member-states”, says the President. The law introduced some import and export restrictions.

The current Law of the republic of Hungary on supplies of food products came into effect on 1st January 2010.