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Austrian supermarket chain Spar has accused Hungary of breaking EU law in an effort to bring down rising food prices and called on Brussels to intervene to ease the “devastating” effect on its operations.
The group claimed that a special tax that Prime minister Viktor Orbán’s government introduced in 2022 was discriminatory and breached a number of EU laws, including over the free movement of goods.
The measures from the government, which include a 4.5 per cent tax targeting the revenues of foreign-owned retailers and a requirement to lower prices across a range of staples, remain in place even though the inflation rate has fallen sharply.
“Spar submits that the measures in question are clearly incompatible with EU law as they violate, in particular (. . .) the free movement of goods and the freedom of establishment and the charter of fundamental rights,” according to a complaint submitted to the EU last week.
According to the complaint, a copy of which was seen by the Financial Times, the government’s intervention has increased Spar’s costs by about €90mn, leaving its business there with a loss of almost €50mn in 2023. Spar is the second-biggest foreign retailer in Hungary by turnover.
Orbán has long blamed foreign companies for higher food costs, claiming last year that they have “hiked prices more than justifiable” and that the government needs to “show force” in addressing it.
Under the government’s regime, retailers are required to offer at least one item from a list of 20 products, including fish, poultry, eggs and coffee, at a 10 per cent discount to the average price of the preceding 30 days.
According to Spar’s complaint, the measures from the government “upset the balance of demand and supply in the agricultural and food market; they allow in a discriminatory way small, independent retailers and franchise network members to avoid such losses by buying at the promotional or reduced price from large integrated retailers”.
Spar is not the only foreign retailer with significant businesses in Hungary. Discounter Lidl and Tesco, the UK’s largest supermarket group, both have operations there. Lidl did not provide a comment. Tesco referred questions to the Hungarian retailers association, which declined to comment.
After reaching more than 20 per cent in early 2023, Hungary’s inflation has fallen sharply to close to the central bank’s long-term target of 3 per cent.
The Hungarian government did not respond to a request for comment on Spar’s complaints.
The European Commission declined to comment. The EU’s executive body could decide to investigate the complaint, which could ultimately lead to the Hungarian government having to change its policies.
Orbán has resorted to unorthodox taxation several times since coming to power in 2010 and has previously targeted the financial services, energy and telecommunications sectors.
Read the full article here
