European Commission Launches Infringement Procedure Against Hungary Over Retail Price Restrictions

Unfair Margins and Discriminatory Taxation Prompt Legal Action

The European Commission has launched infringement proceedings against Hungary, citing unjust pricing margin restrictions imposed on non-Hungarian companies selling both food and non-food products, according to European Supermarket Magazine.

⚖️ Below-Cost Sales Imposed on Foreign Retailers

The measures in question apply to both food retailers and pharmacies, capping the profit margins on certain goods to levels that, according to affected foreign companies, do not cover production and operational costs — effectively forcing them to sell at a loss.

The Commission argues that this violates Article 49 of the Treaty on the Functioning of the European Union (TFEU), which guarantees freedom of establishment and mandates equal treatment for all economic operators within the EU Single Market.

EU law allows public authorities to introduce restrictions only when they are necessary and proportionate to achieving legitimate public interest objectives — conditions the Commission believes Hungary’s measures fail to meet.

Hungary now has two months to address the Commission's concerns. Failure to do so could trigger further legal steps, including a formal reasoned opinion or escalation to the European Court of Justice.

💶 Hungarian Retail Tax Under Scrutiny

In a separate but related case, the Commission has also escalated its investigation into Hungary’s controversial retail tax — advancing to the second phase of infringement procedures following complaints filed by SPAR and the Austrian government in April 2024.

The complaint claims that Hungary’s 4.5% retail tax unfairly targets foreign-owned retail chains, while granting lower tax rates (0–1%) to domestic businesses operating under franchise models — potentially violating the EU’s principles of non-discrimination and fair competition.

Moreover, the price caps that have allegedly forced the sale of certain goods below cost have also been flagged as a cause for concern.

🔍 A Broader Signal to the Region?

While the EU’s legal proceedings currently focus on Hungary, this situation sends a strong signal to other member states, including Romania, where similar policy proposals — such as margin caps or selective tax regimes — have been debated.

Legal experts and market observers warn that following Hungary’s example may expose other countries to similar scrutiny from Brussels, especially if such measures disproportionately affect foreign investors or disrupt Single Market principles.