Hungary's price freeze violated EU law, ECJ rules

On Thursday, the European Court of Justice ruled that the Hungarian authorities broke EU law by regulating the prices of certain food products through a government decree. The decree, issued in response to high inflation, remained in force until July 2023. In the ECJ's assessment, it violated free competition.

In response to inflation, the Hungarian government froze the prices of six products at the beginning of 2022. Retailers were required to supply a specified quantity of these items at official prices. This included sugar, oil, milk, flour, and pork and poultry meat. Prime Minister Viktor Orban's government justified these measures by citing the Covid-19 pandemic. After the Russian attack on Ukraine in February 2022, eggs and potatoes were added to the list.

According to the decree, stores could be penalised for not adhering to the set prices. In May 2023, the SPAR chain was fined for not complying with the daily limit for five products specified by the government at one of its outlets. SPAR appealed the fine in court, which then referred the matter to the European Court of Justice.

The ECJ found that the Hungarian decree violated free competition within the EU, particularly the regulation on the common organisation of markets. The judges in Luxembourg considered Budapest's argument about protecting consumers affected by inflation. However, they deemed the measures applied - the government decree - to be disproportionate.

Even assuming that the contested government decree is capable of protecting disadvantaged consumers by means of a guaranteed supply of basic foodstuffs at affordable prices and of combating inflation, that decree goes beyond what is necessary to achieve those objectives - the ECJ decree reads.

However, the ruling does not settle the dispute. The Hungarian court will issue the final verdict in the case.