European Commission v Hungary.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2021:194
• Docket Number: C-400/19
• Celex Number: 62019CJ0400
• Court: Court of Justice (European Union)
• Date: 11 March 2021

Provisional text

JUDGMENT OF THE COURT (Fourth Chamber)

11 March 2021 (*)

(Failure of a Member State to fulfil obligations – Common organisation of the markets in agricultural products – Regulation (EU) No 1308/2013 – Article 34 TFEU – Selling prices of agri-food products – Minimal profit margins to be applied in the retail trade of those products)

In Case C‑400/19,

ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 23 May 2019,

European Commission, represented by A. Sipos, X. Lewis and E. Manhaeve, acting as Agents,

applicant,

v

Hungary, represented initially by M.Z. Fehér, G. Koós and Zs. Wagner, and subsequently by M.Z. Fehér and G. Koós, acting as Agents,

defendant,

THE COURT (Fourth Chamber),

composed of M. Vilaras, President of the Chamber, N. Piçarra, D. Šváby, S. Rodin (Rapporteur) and K. Jürimäe, Judges,

Advocate General: G. Hogan,

Registrar: I. Illéssy, Administrator,

having regard to the written procedure and further to the hearing on 3 September 2020,

after hearing the Opinion of the Advocate General at the sitting on 12 November 2020,

gives the following

Judgment

1 By its application, the European Commission asks the Court to declare that, by adopting Paragraph 3(2)(u) of the mezőgazdasági és élelmiszeripari termékek vonatkozásában a beszállítókkal szemben alkalmazott tisztességtelen forgalmazói magatartás tilalmáról szóló 2009. évi XCV. törvény (Law No XCV of 2009 prohibiting unfair trading practices applied against suppliers of agricultural and food products; ‘Law No XCV of 2009’) and by thus restricting the way in which the selling prices of agricultural and food products are formed, Hungary has failed to fulfil its obligations under Article 34 TFEU and Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (OJ 2013 L 347, p. 671).

Legal context

European Union law

2 Recital 172 of Regulation No 1308/2013 states:

‘In view of the specific characteristics of the agricultural sector and its reliance on the good functioning of the entire food supply chain, including the effective application of competition rules in all related sectors throughout the whole food chain, which can be highly concentrated, special attention should be paid to the application of the competition rules laid down in Article 42 TFEU …’

3 Article 83(5) of that regulation provides:

‘Member States may only adopt or maintain additional national provisions on products covered by a Union marketing standard if those provisions comply with Union law, in particular the principle of free movement of goods, and subject to Directive 98/34/EC of the European Parliament and of the Council [of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations and of rules on Information Society services (OJ 1998 L 204, p. 37)].’

Hungarian law

4 Paragraph 1 of Law No XCV of 2009 specifies that that law is intended to ensure that there is fair commercial behaviour between bodies trading in agricultural and food products and their suppliers.

5 Pursuant to its Paragraph 2(1), that law relates to (i) undertakings producing, processing or selling without processing agricultural and food products and (ii) undertakings selling those products to final consumers. The latter category includes all retailers, irrespective of their size, and therefore applies to both hypermarkets and small shops selling agricultural and food products.

6 Paragraph 3(2)(u) of that law provides:

‘The following shall be deemed to be an unfair commercial practice:

…

(u) any discriminatory fixing, on the basis of the country of origin of the products, of the price at which products identical in composition and organoleptic properties are sold to the final consumer.’

Pre-litigation procedure

7 On 12 January 2015, the Commission sent a letter to the Hungarian authorities in order to obtain information on Paragraph 3(2)(u) of Law No XCV of 2009 (‘the measure in question’). Hungary replied to that letter on 23 March 2015.

8 Taking the view that it needed additional information, the Commission sent Hungary a request for information on 7 July 2015, to which Hungary replied on 22 July 2015.

9 On 16 February 2017, the Commission sent a letter of formal notice to Hungary, in which it expressed doubts as to the compatibility of certain provisions of Law No XCV of 2009 with Regulation No 1308/2013 and Article 34 TFEU.

10 On 7 June 2017, Hungary replied to that letter of formal notice, disputing the alleged failure to fulfil obligations.

11 On 9 March 2018, the Commission issued a reasoned opinion in which it maintained the position which it had set out in its letter of formal notice. The Commission called on that Member State to take the measures necessary to comply with that reasoned opinion within two months of its receipt. Hungary replied to that opinion on 11 May 2018, reiterating its position that its legislation complies with EU law.

12 As it was not satisfied with that reply, the Commission brought the present action for failure to fulfil obligations.

The action

13 In support of its action, the Commission submits that the measure in question is incompatible with Regulation No 1308/2013 and Article 34 TFEU. It is first necessary to address the complaint alleging infringement of that regulation and, subsequently, the complaint alleging infringement of Article 34 TFEU.

The first complaint, alleging infringement of Regulation No 1308/2013

Arguments of the parties

14 The Commission observes that the measure in question provides, in essence, that retail prices for agricultural and food products from a given country must include the same profit margin as that applied to identical products from another country, with the result that it prohibits the setting of different margins for identical products from different countries, the concept of ‘identical products’ being defined by reference to the composition and organoleptic properties of the product (‘the identical products’).

15 The Commission observes that, although the Member States remain, in principle, competent to adopt certain measures which are not provided for in Regulation No 1308/2013, the fact remains that such measures must not be such as to derogate from or undermine that regulation, or impede its proper functioning.

16 In that regard...