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It’s worth taking a quick look at Vienna today. Austria intends to present its long-awaited national energy and climate plan this Tuesday. It is the plan with which the EU member states must outline the measures they are taking to achieve the EU climate targets.
A draft was sent to the Commission in the fall, but was withdrawn shortly afterwards due to internal government disputes. Since then, there have been disputes both within the government in Vienna and with the EU Commission. Brussels even initiated infringement proceedings against Austria.
So now the so-called NECP is to come, and some details are already known: Vienna apparently wants to use “Carbon Capture and Storage” (CCS) to prevent unavoidable emissions from industry. Subsidies that are harmful to the climate are to be abolished, thus “saving at least two million tons of CO2 per year”. The tax privilege for diesel fuel could also be abolished.
Does this sound familiar to you? Similar debates about climate-damaging subsidies are also being held in Germany these days. If Vienna gets its act together, this could possibly put Berlin under even more pressure. After all, the German government likes to boast that it is a pioneer in climate action in Europe.
I wish you an insightful read.
These are difficult times for foreign food retailers in Hungary. For years, they have been confronted with special taxes, bureaucratic hurdles and controls in the country that domestic supermarket chains do not have to fear to the same extent. After recently suspending a particularly controversial regulation, the Hungarian government is apparently already working on a new tax that could be detrimental to foreign food retailers.
The fact that Hungary wants to “reduce the proportion of foreign companies in the main strategic sectors“, as Adrian Stadnicki, Regional Director for Central Eastern Europe at the Committee on Eastern European Economic Relations, describes it, is not a new development. The Hungarian government has been communicating its goals openly and transparently since the 2010s, says Stadnicki. Sectors such as food retail have been affected by numerous measures since then.
In 2020, Viktor Orbán’s government introduced a retail tax that obliges large foreign food companies to pay 4.5 percent on their annual turnover. In the wake of the Russian war of aggression against Ukraine, state-imposed price caps for some staple foods and a so-called stockpiling obligation have since been added. In this context, foreign companies have been subject to particularly frequent inspections, says Stadnicki.
Although the price caps expired on June 30, 2024, sector-specific special taxes continue to burden foreign food retail groups. At the beginning of July, the Hungarian government announced that it would not abolish the retail tax in 2025 either. Orbán’s Chief of Staff Gergely Gulyás presented an anti-war action plan under which the Hungarian government wants to oblige companies that make additional profits in times of war to pay a defense contribution.
In its country report on Hungary from June 2024, the EU Commission concludes that the sector-specific taxes represent a disproportionately high burden for the companies concerned and impair the functioning of the internal market. “The retail sector is confronted with special regulations that hinder development“, the report states. The tax on the retail sector places a disproportionate burden on larger companies, which are generally foreign-owned.
Orbán’s government makes no secret of the fact that it wants foreign companies in the food retail and construction sectors in particular to leave the country. Hungarian Construction and Transport Minister János Lázár, for example, has recently repeatedly stated publicly that it is time to “send foreign companies home” or that it would be better for them to sell their subsidiaries and “leave Hungary”.
The French retail chain Auchan complied with this request last year. At the end of November 2023, news broke that Auchan had sold almost half of its Hungarian business to the Hungarian Indotek Group owned by billionaire Daniel Jellinek, who, according to media reports, is close to Orbán’s son-in-law.
The Austrian food group Spar, Hungary’s second-largest food retailer after Lidl, has opted for a different way to respond to these signals: public confrontation. A few months ago, Spar lodged a complaint with the EU Commission. As a result, the Hungarian government announced that it would sue the Spar Group for defamation. “They want to drive us out”, Nicole Bergmann, spokesperson for Spar management, told ORF in mid-July.
In the letters of complaint, Spar not only addressed the EU Commission Vice-President responsible for competition, Margrethe Vestager, and the Internal Market Commissioner, Thierry Breton, but also called – together with the Austrian government – for infringement proceedings to be initiated. It is not yet clear whether the EU Commission will comply with this request. When asked by Table.Briefings, a spokesperson said: “The Commission is not commenting on the status of the case or the deadlines for processing complaints.”
Meanwhile, the German government has also been called upon to support the demand to initiate infringement proceedings. The Committee on Eastern European Economic Relations recently sent a letter to Minister Robert Habeck calling on him to take action.
Antje Gerstein, Managing Director for European Policy at the German Retail Association (HDE), knows just how difficult the situation in Hungary is for German food retailers. “In recent years, there have been repeated problems for companies from the German food retail sector in Hungary”, says Gerstein. The HDE is therefore lobbying the relevant EU institutions to take appropriate measures against the constant creation of new protectionist laws in Hungary. “The internal market and the legal framework of the EU must also apply in Hungary”, demands Gerstein.
Meanwhile, the German food retail groups themselves, some of which operate on a large scale in Hungary, are holding back with direct criticism of the Hungarian authorities. Only the Schwarz Group, which is considered the market leader in the Hungarian food retail sector with its Lidl discount stores, said in response to an inquiry: “As a matter of principle, we adhere to legal requirements and face up to competition in Hungary. We advocate fair competition and conditions that are the same for all national and international market participants.” The Rewe Group and Aldi Süd are unanimous: no comment.
While Austria’s Spar is publicly opposing the Hungarian government, German food retailers are keeping a surprisingly low profile. This could be due not only to the fear of stricter controls but also to the possible behavior of other EU countries. Stadnicki from the Committee on Eastern European Economic Relations expresses the fear that other member states could follow Hungary’s example and introduce similar protectionist measures. One thing is certain for him: “The model of systematic discrimination against foreign companies must not be allowed to become established in Europe.”
It’s worth taking a quick look at Vienna today. Austria intends to present its long-awaited national energy and climate plan this Tuesday. It is the plan with which the EU member states must outline the measures they are taking to achieve the EU climate targets.
A draft was sent to the Commission in the fall, but was withdrawn shortly afterwards due to internal government disputes. Since then, there have been disputes both within the government in Vienna and with the EU Commission. Brussels even initiated infringement proceedings against Austria.
So now the so-called NECP is to come, and some details are already known: Vienna apparently wants to use “Carbon Capture and Storage” (CCS) to prevent unavoidable emissions from industry. Subsidies that are harmful to the climate are to be abolished, thus “saving at least two million tons of CO2 per year”. The tax privilege for diesel fuel could also be abolished.
Does this sound familiar to you? Similar debates about climate-damaging subsidies are also being held in Germany these days. If Vienna gets its act together, this could possibly put Berlin under even more pressure. After all, the German government likes to boast that it is a pioneer in climate action in Europe.
I wish you an insightful read.
These are difficult times for foreign food retailers in Hungary. For years, they have been confronted with special taxes, bureaucratic hurdles and controls in the country that domestic supermarket chains do not have to fear to the same extent. After recently suspending a particularly controversial regulation, the Hungarian government is apparently already working on a new tax that could be detrimental to foreign food retailers.
The fact that Hungary wants to “reduce the proportion of foreign companies in the main strategic sectors“, as Adrian Stadnicki, Regional Director for Central Eastern Europe at the Committee on Eastern European Economic Relations, describes it, is not a new development. The Hungarian government has been communicating its goals openly and transparently since the 2010s, says Stadnicki. Sectors such as food retail have been affected by numerous measures since then.
In 2020, Viktor Orbán’s government introduced a retail tax that obliges large foreign food companies to pay 4.5 percent on their annual turnover. In the wake of the Russian war of aggression against Ukraine, state-imposed price caps for some staple foods and a so-called stockpiling obligation have since been added. In this context, foreign companies have been subject to particularly frequent inspections, says Stadnicki.
Although the price caps expired on June 30, 2024, sector-specific special taxes continue to burden foreign food retail groups. At the beginning of July, the Hungarian government announced that it would not abolish the retail tax in 2025 either. Orbán’s Chief of Staff Gergely Gulyás presented an anti-war action plan under which the Hungarian government wants to oblige companies that make additional profits in times of war to pay a defense contribution.
In its country report on Hungary from June 2024, the EU Commission concludes that the sector-specific taxes represent a disproportionately high burden for the companies concerned and impair the functioning of the internal market. “The retail sector is confronted with special regulations that hinder development“, the report states. The tax on the retail sector places a disproportionate burden on larger companies, which are generally foreign-owned.
Orbán’s government makes no secret of the fact that it wants foreign companies in the food retail and construction sectors in particular to leave the country. Hungarian Construction and Transport Minister János Lázár, for example, has recently repeatedly stated publicly that it is time to “send foreign companies home” or that it would be better for them to sell their subsidiaries and “leave Hungary”.
The French retail chain Auchan complied with this request last year. At the end of November 2023, news broke that Auchan had sold almost half of its Hungarian business to the Hungarian Indotek Group owned by billionaire Daniel Jellinek, who, according to media reports, is close to Orbán’s son-in-law.
The Austrian food group Spar, Hungary’s second-largest food retailer after Lidl, has opted for a different way to respond to these signals: public confrontation. A few months ago, Spar lodged a complaint with the EU Commission. As a result, the Hungarian government announced that it would sue the Spar Group for defamation. “They want to drive us out”, Nicole Bergmann, spokesperson for Spar management, told ORF in mid-July.
In the letters of complaint, Spar not only addressed the EU Commission Vice-President responsible for competition, Margrethe Vestager, and the Internal Market Commissioner, Thierry Breton, but also called – together with the Austrian government – for infringement proceedings to be initiated. It is not yet clear whether the EU Commission will comply with this request. When asked by Table.Briefings, a spokesperson said: “The Commission is not commenting on the status of the case or the deadlines for processing complaints.”
Meanwhile, the German government has also been called upon to support the demand to initiate infringement proceedings. The Committee on Eastern European Economic Relations recently sent a letter to Minister Robert Habeck calling on him to take action.
Antje Gerstein, Managing Director for European Policy at the German Retail Association (HDE), knows just how difficult the situation in Hungary is for German food retailers. “In recent years, there have been repeated problems for companies from the German food retail sector in Hungary”, says Gerstein. The HDE is therefore lobbying the relevant EU institutions to take appropriate measures against the constant creation of new protectionist laws in Hungary. “The internal market and the legal framework of the EU must also apply in Hungary”, demands Gerstein.
Meanwhile, the German food retail groups themselves, some of which operate on a large scale in Hungary, are holding back with direct criticism of the Hungarian authorities. Only the Schwarz Group, which is considered the market leader in the Hungarian food retail sector with its Lidl discount stores, said in response to an inquiry: “As a matter of principle, we adhere to legal requirements and face up to competition in Hungary. We advocate fair competition and conditions that are the same for all national and international market participants.” The Rewe Group and Aldi Süd are unanimous: no comment.
While Austria’s Spar is publicly opposing the Hungarian government, German food retailers are keeping a surprisingly low profile. This could be due not only to the fear of stricter controls but also to the possible behavior of other EU countries. Stadnicki from the Committee on Eastern European Economic Relations expresses the fear that other member states could follow Hungary’s example and introduce similar protectionist measures. One thing is certain for him: “The model of systematic discrimination against foreign companies must not be allowed to become established in Europe.”