The Hungarian Dohányforgalmazó Rt. (MADOF) with 10 wholesalers requested the Hungarian Office of Economic Competition to consider their agreement as not anti-competitive and give an exemption from the prohibition of anti-competitive agreements. At first eight and then further two wholesalers established MADOF to make their purchases directly from tobacco factories as the factories sold products directly to buyers who marketed the questioned product in a volume in a year that the members of MADOF could not fulfil. Purchases and sale activities of the members of MADOF were regulated by a syndicate agreement. The share of direct purchasing from tobacco factories increased from 18 per cent to 32 per cent between the time of the establishment of MADOF and the investigation of the Hungarian Competition Office.

The Competition Council made its decision with different results on certain parts of the syndicate agreement:

The Competition Council did not qualified anti-competitive the regulations on the inside operational order of MADOF.

Chapter on collective purchasing was considered anti-competitive under the Competition Act, article 11 (2)(e), but the Competition Council took the view that the agreement contributes to a more rational organisation of trading, save the competitiveness of its members as they could not be purchase individually. Elimination of competition would not be possible because of the market position of a strong competitor. On the ground of these the Competition Council exempted the chapter on collective purchasing.

In the framework of harmonisation of selling the members intended to clarify discounts uniformly, and limited to open new shops that were considered anti-competitive by the Competition Council and it could not find any advantages of this section of the agreement to establish the exemption.

Since the agreement was already in effect at the time of the investigation, although its practical effect on the market was still inessential, the Competition Council ordered to stop anti-competitive market conduct and imposed a minimal amount of fine [HUF 1 million (4000 ECU)] on MADOF.

June 11, 1998. Budapest

dr. Bodócsi András sk. előadó
Fógel Jánosné dr. sk.
dr. Sólyom Eszter sk.
Ágoston Marika