Category: Hungary

Kinstellar has advised Nestle on its sale of the Boci Hungarian chocolate brand to Hungary’s Cerbona. Oppenheim reportedly advised Cerbona.

The transaction is expected to close in May 2024.

In Hungary, Boci is an iconic chocolate brand with a heritage spanning nearly a century, Kinstellar reported.

Established in 1987, with the brand name launched in 1988, Cerbona is a Budapest-based food and cereal-based snack manufacturing company.

The Kinstellar team was led by Partner Gabor Gelencser and included Partner Peter Voros, Managing Associate Daniel Nagy, and Associates Gergely Simon Liptak and Orsolya Staniszewski.

Editor’s Note: After this article was published, Oppenheim confirmed it had advised Cerbona on the acquisition of the Boci, Melba Kocka, and Parizsi Kocka chocolate brands from Nestle. The firm’s team included Partners Jozsef Bulcsu Fenyvesi and Istvan Szatmary, Senior Counsel Agnes Szaz, Counsel Barna Fazekas, and Senior Associate Andras Cserny.

Schoenherr has advised Bontexgeo on the renewal of its lease agreement for an industrial facility in Tiszaujvaros with Cordys Holding Zrt. Sole practitioner Tamas Eperjesi reportedly advised the lessor.

The target asset includes 10,500 square meters of production space and a 20,000-square-meter storage area.

Bontexgeo is a company specializing in producing geotextiles and technical textiles.

Cordys Holding is, according to Schoenherr, one of the main players in the industrial real estate investment sector in Eastern Hungary.

The Schoenherr team was led by Partner Laszlo Kruepl.

The recent judgement of the Court of Justice of the European Union (“CJEU”) on the sale of over-the-counter (OTC) medicinal products online (C-606/21, decision published on 29.02.2024) may have a direct impact on the existing Hungarian legislation and established market practice.

Case summary

The Union des Groupements de pharmaciens d’officine (UDGPO) challenged the legality of the services provided by Doctipharma, an online platform provider facilitating the sale of OTC medicines from pharmacy websites liked to its platform. The Union argued that by providing a service through its platform, Doctipharma was involved in the online sale of medicinal products and violated French legislation prohibiting the sale of medicinal products by unqualified persons.

The Court clarified that Doctipharma’s service constituted an “information society service” under EU law, connecting dispensing pharmacists and potential patients through the service of selling OTC medicines. 

The Court differentiated two scenarios:

1. it concluded that a Member State can prohibit the provision of services, if a service provider lacking the pharmacist’s qualification, intends to sell OTC medicines on their own,
2. it concluded that if the service provider merely facilitated connections between sellers and customers, without engaging in direct sales, Member States cannot prohibit the provision of services even if the service provider lacks the pharmacist’s qualification.

The Court finally concluded that Member States have the authority to regulate who can sell OTC medicines online but should also allow online sales through a third party that solely facilitates connections between sellers and customers.

Online sales in Hungary

In Hungary, only pharmacies are legally allowed to conduct online sales of OTC medicines, and are required to inform the Hungarian pharmaceutical authority of their website prior to commencing operations. 

Online platform providers can facilitate the sale of OTC medicines, but due to the recently tightened rules involving home delivery, they can only sell the aforementioned products; customers need to pick-up their orders at the pharmacy. In practice, this means that the sale of these products by online platform providers is rather limited, if it exists at all. Therefore, the question is whether the rules regarding home delivery in Hungary can be considered compatible with the EU law, in light of the CJEU’s decision.

By Miriam Fuchs, Senior Associate, and Lilla Lantai, Associate, Wolf Theiss

Oppenheim has advised Carussel on the sale of a majority stake in the company to Genesis Capital, on the related agreement regulating their future business cooperation, and on the partial bank financing for the transaction. Kinstellar advised the Genesis Growth Fund I on the purchase.

Carussel is a digital company specializing in the automotive sector, developing tools for automotive companies to reach and serve their customers in the online space.

Genesis Capital offers financing for growth and development to small and medium-sized companies in Central Europe. Since its foundation in 1999, Genesis Capital has advised six private equity funds with a total volume exceeding EUR 350 million.

The Oppenheim team included Partners Jozsef Bulcsu Fenyvesi and Peter Horvai-Hillenbrand, Senior Associate Lilla Sary-Keresztes, and Associates Patrik Pazmandi and Gergely Szecsenyi.

The Kinstellar team included Partners Jan Juroska and Annamaria Csenterics, Managing Associate Michal Kniz, and Senior Associate Aron Barta.

From 28 March 2024, businesses operating in Hungary will be required to offer services by the state-owned enterprise Hungarian Post (“Magyar Posta”) as a delivery option for consumers using their online stores. The text of the new provision is concise and has raised several questions.

It is clear that the new provision will only apply to B2C relationships, i.e. when the purchaser is a consumer. Every private individual (including self-employed person) who acts outside the scope of their profession or business activity is a consumer. The new regulation also only applies to products that are not excluded under Magyar Posta’s general terms and conditions (“GTC”). For example, dangerous goods under the ADR are excluded as well as hot meals prepared for delivery on the same day, and all products that require continuous refrigeration throughout their delivery.

The Government Decree that introduced the new rule does not contain any official reasoning or explanation, nor has the government published a justification for its adoption. The Ministry of National Economy (the “Ministry”) and Magyar Posta have both collected frequently asked questions on this topic and provided some practical answers. However, as their publications are not legally binding instruments, they can only serve as soft guidelines when interpreting the new rule. For example, the Ministry has stated that even though the scope of the Government Decree covers businesses selling goods in Hungary in general, the obligation only applies to deliveries dispatched from Hungary (e.g. from a Hungarian warehouse) and does not apply where the goods are dispatched from a state other than Hungary. This is due to the scope of Magyar Posta’s GTC, which stipulate that it provides a delivery service only for items posted in Hungary.

Magyar Posta has also published a guide for businesses on how they may introduce Magyar Posta as a delivery option. Businesses basically have two options. The first is to register on Magyar Posta’s website and, in accordance with Magyar Posta’s GTC, use its services on an ad hoc basis. These services do not include the collection of the goods by Magyar Posta at the business’s warehouse, but the business must take the goods to Magyar Posta’s dispatch point first. The second option is to conclude an agreement with Magyar Posta, which means that the business probably needs to commit to a number of deliveries in exchange for Magyar Posta collecting the goods from the business’s warehouse.

Businesses operating online stores are now wondering whether they are allowed to charge consumers a fee for the cost of delivering the goods to Magyar Posta’s dispatch point, as the additional cost seems to be commercially justified. According to Magyar Posta, this is permissible if the consumer is informed in advance about the costs incurred by the business and the fees of Magyar Posta which are then passed on to the consumer.

Businesses are concerned about this significant regulatory change, due to the potential imposition of additional costs and the administrative burden associated with integrating the Magyar Posta delivery option into their online stories. For businesses, compliance with the new rule requires adjustments to logistics, which can also potentially affect pricing strategies.

By Kinga Hetenyi, Partner, Schoenherr

Miklos Klenanc – a former Attorney at Law with PwC Legal in Hungary – has joined the Budapest office of Schoenherr as a Senior Attorney at Law to lead the firm’s local M&A practice.

According to Schoenherr, “his expertise covers mergers and acquisitions, corporate structuring and restructuring, company simplifications, corporate law, governance and compliance, and reversed compliance,” while being an “experienced dispute prevention and dispute resolution lawyer as well as a licensed mediator.” Before joining Schoenherr, Klenanc spent the last 13 and a half years with PwC Legal in Hungary, where he started as an Intern back in 2011. For the past eight years, he’s also been the Principal of the Klenanc Miklos Law Firm. He is currently in the process of preparing his doctoral dissertation.

“The growing number and complexity of M&A deals has increased the demand for further dedicated expertise in this field. We are thus excited to welcome Miklos Klenanc, who will boost our M&A capabilities in Hungary and the CEE region,” Co-Head of Schoenherr M&A Alexandra Doytchinova commented.

“Miklos’s addition to our already strong corporate/M&A practice in Hungary is another key step in the process of further strengthening our Hungarian and CEE-wide offerings,” Corporate/M&A Partner Kinga Hetenyi added.

Since early 2024, Hungarian legislative efforts have brought about several updates to consumer protection regulations. Ranging from novelties in consumer complaints and related processes, increased consumer protections fines, expanded rights of the consumer protection and competition authority to an unexpected obligation imposed on e-commerce providers to include the local postal delivery provider as a delivery option, changes to the sector have been diverse.

Complaint handling and conciliation processes

As of 1 January 2024, the powers of the Consumer Conciliation Boards were generally extended, imposing a mandatory obligation on all businesses to be bound by the decisions of the Consumer Conciliation Boards, even in the absence of a formal submission of the business to such processes. This new rule applies to all disputes with a value below HUF 200,000.

The changes have had an effect on the format of hearings as well, since from now on hearings will be held primarily in person, unless requested otherwise.

Increased consumer protection law fines

As of 1 March 2024, businesses can expect significantly higher penalties in cases of consumer protection law violations. The increase affects both the minimum and the maximum fine. However, there are certain cases where the maximum fine has increased by up to 50% or more.

The newly increased fine ranges are as follows:

For businesses with an annual net sales revenue in excess of approx. EUR 255,000 and not considered small and medium-sized enterprises:

• Approx. EUR 2,600 or up to 5% per cent of the annual net sales revenue capped at a maximum of approx. EUR 1,655,000;
• If the infringement concerns the life, health and physical integrity of consumers, or if it results in substantial financial impact to a broad range of consumers, the fine is between approx. EUR 5,000 and capped at a maximum of approx. EUR 7,630,000.
• In cases of repeated infringements that have occurred within a 3-year period at businesses providing e-commerce services:
  • the amount of the fines may increase further between approx. EUR 5,000 and 5% per cent of the annual net sales revenue, capped at a maximum of approx. EUR 7,630,000, or
  • between approx. EUR 10,000 and capped at a maximum of approx. EUR 12,670,000 if the infringement concerns the life, health, physical integrity or substantially impacts the financial status, of a broad range of consumers.

Expanded powers of the authorities

Since 1 March 2024, the competency of both the Hungarian Consumer Protection Authority (HCPA) and the Hungarian Competition Authority (HCA) has expanded with the ability to render certain electronic data temporarily inaccessible, effectively even shutting down complete websites in cases of serious breaches of consumer rights.

Webshops’ obligation to offer the MPL services

Following a recent amendment to Hungarian postal regulations, it is now mandatory for online retailers and online store operators that maintain webshops to offer the option of parcel delivery from the Hungarian Postal Service (MPL) as a delivery solution in addition to the options already available.

The amended regulation will come into effect on 28 March, however, apart from a dedicated site maintained by MPL offering guidance on how to ensure compliance with the soon-arriving changes, (link: https://www.posta.hu/webaruhaz_jogszabaly_gyik/kormanyrendeletnek_valo_megfeleles), competent authorities have still yet to issue any distinct set of clarificatory notes on the exact rules applicable for businesses.

What appears to be clear is that regardless of whether businesses choose to enter into a separate arrangement with MPL or offer services based on their general terms and conditions, the option to choose this local provider will have to be made available to all consumers purchasing goods online in Hungary.

Suggested actions

Businesses are strongly advised to update their general terms and conditions to reflect the above changes, especially those procedural updates concerning the Consumer Conciliation Boards and the information obligation regarding the MPL’s postal delivery services and corresponding costs.

By Peter Ihasz and Miriam Fuchs, Senior Associates, and Dorottya Mercsek, Associate, Wolf Theiss

Schoenherr has advised Switzerland-based MET Group subsidiary Oberon Solar Park on its acquisition of 52 hectares of land in Kaba, eastern Hungary. Sole practitioner Zsolt Gaal reportedly advised an undisclosed agricultural entrepreneur on the sale.

The MET Group is a Swiss-based energy company with activities in the European natural gas, power, and oil markets. By way of its subsidiaries, the MET Group is present in 15 countries, 26 national gas markets, and 22 international trading hubs.

According to Schoenherr, the transaction was performed as a share deal and will enable the MET Group to construct the Kaba2 project. For reference, the Kaba1 project was constructed in 2021 and has been operating since with a capacity of 43 megawatts (AC). The MET Group has announced that a new 21-megawatt (AC) capacity solar park will be developed using AI tools, with work having already begun.

The Schoenherr team was led by Partner Laszlo Krupl and included Attorneys Gergely Horvath and Adrian Menczelesz and Associate Viktoria Magyar.

Former Nagy & Trocsanyi Partner Viktor Jeger has joined the Lakatos Koves & Partners Dispute Resolution team.

According to LKT, Viktor has more than a decade of experience in energy, real estate, regulatory, construction, and investment disputes, including arbitration. Before joining LKT, Jeger spent almost 11 years with Nagy & Trocsanyi, the final two of which as a Partner.

“We are very pleased to welcome Viktor to our team,” Head of Dispute Resolution Balazs Fazakas said. “We are uniquely positioned to advise on problematic issues and represent our clients in domestic and cross-border litigation, international arbitration, and investigations […] Viktor’s arrival significantly enhances our offering and capabilities in this area.”

“I am delighted and honored to be joining LKT as a senior dispute resolution lawyer,” Jeger added. LKT “has been a thought-leader on dispute resolution law matters for the past 35 years, and includes so many great colleagues who are industry-leading experts focused on delivering the highest quality legal services to their clients.”

The governmental decree published on 22 February (No. 33/2024 (II. 22.)) sets forth the establishment of a new project company to manage the provision of inpatient pharmaceuticals in all public hospitals, as well as those private hospitals that choose to join the initiative. The Decree is a follow up to the amendments in the Medicines Thrift Act (Act XCVIII of 2006) from July 2023, which stipulated the basic conditions for a “unified institutional pharmacy service” for public hospitals. The project company shall be operational from January 2025.

The Minister responsible for general political coordination, with the assistance of the National Concession Office, is authorised to conduct the concession procedure for selecting the project company. The project company, as concession holder, will be obligated to pay a concession fee.

Pursuant to the Decree, the project company, as part of the unified institutional pharmacy service:

• performs the procurement, storage, warehousing, control and delivery tasks required for the specialised activities of the departments providing direct, prescription only medicines related pharmaceutical services to the general public;
• may carry out wholesale activities;
• must carry out the necessary improvements to the uniform image of the departments providing direct, prescription only medicines related pharmaceutical services;
• supplies the stockpiling, maintenance, monitoring, and dispensing of medicinal products related to the basic tasks of the institutional pharmacy, as well as coordinating and logistical duties;
• must be given the opportunity to provide the basic and specialised tasks through another healthcare provider;
• must implement and operate individual medication dispensing systems; and
• is obligated to develop an IT system that the institutional pharmacies can use.

According to the Decree, from 1 January 2025, the procurement of medicinal products by the project company will be exempted from the specific rules on public procurement of medicinal products and medical devices. In terms of the costs of procured medicinal products, the project company will invoice the National Health Insurance Fund of Hungary (NEAK) separately from traditional hospital financing, since it will contract directly with NEAK for settlement.

The Decree further ensures that only the project company will be entitled to operate institutional pharmacies in public hospitals. In this context, the Decree allows several exemptions for the project company under geographic, demographic and material requirements. In addition to the above, the Decree will allow the project company to engage in wholesale activities, even though there is currently a statutory prohibition on wholesale ownership in retail pharmacies. Finally, it seems that the employment relationship of institutional pharmacy staff will change only slightly under the Decree since the majority of employer rights continue to be exercised by the management of public hospitals. In certain cases, however, the holder of the employer’s rights will be the project company.

By Miriam Fuchs, Senior Associate, and Bence Andras Kiraly, Associate, Wolf Theiss