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Parl’t Passes New Bill Dealing Severe Blow to Hungary’s Largest, Foreign Supermarket Chains

Péter Cseresnyés 2021.12.14.

On Tuesday, in a fast-track procedure, parliament passed a new amendment proposal to prevent food waste. Under the proposal, supermarkets that reach a certain turnover threshold are required to hand over food items a few days before the expiration of their ‘best-before’ date. It also increases their retail sales tax from 2.5 to 2.7 percent. According to critics, however, the new regulation’s sole aim is to punish Hungary’s by far largest, foreign supermarket chains in an attempt to help Hungarian-owned market players.

New Proposal against Food Waste

Under a recent bill passed by parliament only a day after it was submitted, Hungary’s largest supermarkets are obliged to donate food items to a state-owned, non-profit organization or charity 48 hours before the expiration of their ‘best-before’ date. The change only affects retailers with an annual net turnover of more than HUF 100 billion.

Essentially, this means that only foreign-owned Aldi, Auchan, Lidl, Penny Market, Spar, and Tesco supermarkets will be subject to the rules, with smaller retailers being excluded from the scope of the law.

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President Áder Discusses Food Waste with Munch App Developer

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The official aim of the legislation is to ensure that goods that are close to their best-before date are delivered to those in need instead of simply going to waste.

According to the proposal, affected stores will also be required to create and submit a food waste reduction plan to authorities, specifying their plan to reduce the food waste they generate. Those who fail to draw up such a plan or those who exceed the planned level of food waste by more than 2% yearly could also be given a fine. However, food items with an expiration date or a remaining shelf-life of less than 48 hours would not be subject to the new regulation.

Fact

There’s a significant difference between expiration dates and best-before use dates. Expiration dates tell consumers the last day a product is safe to consume. Best-before dates, however, show when food is no longer in perfect condition from the given date, but that does not necessarily mean that the food is no longer safe to eat.

The bill also increases the retail sales tax from 2.5 to 2.7 percent, and would change the way it is calculated.

Supermarkets are not given much time to prepare, as the new rules are set to enter into effect as early as February 1, 2022.

Gov’t to punish foreign supermarket chains?

It is undeniable that similar to most developed countries, food waste is a long-standing problem in Hungary. According to official figures, 1.8 million tons of food ends up in the trash every year, which is equivalent to 68 kilos of food wasted per person.

Despite this, news site Telex, which first reported on the proposal, writes that the legislation is likely not meant to combat food waste: instead, the government is actually trying to hit foreign supermarket chains.

Essentially, the bill would take from the largest chains the portion of their products that are approaching their best-before date. These are products that these supermarkets could otherwise still keep on their shelves and sell at full, or at discounted prices. This is expected to be done for free, without any kind of compensation.

Additionally, the proposed obligations would also impose administrative and logistical burdens that would greatly increase the costs of the affected stores.

Moreover, the new rules do not affect every player in the sector, but only supermarkets with an annual turnover of more than HUF 100 billion, all of which are owned by foreign companies. Telex points out that domestic chains also reach this threshold, but they operate in a franchise system as independent companies, and so can avoid the targeted regulations.

The government has been trying for some time to regulate foreign chains to favor domestic companies. One of them, Fidesz MP and government commissioner, János Lázár, has already called for the establishment of an all-Hungarian supermarket chain.

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Fidesz's Lázár Wants Foreign Discounters to be Replaced by Hungarian Ones

The former PMO Head wants national independence in the food sector and suggests that the Hungarian state should try to create a unified Hungarian trade chain.Continue reading

Since the ruling Fidesz party has a qualified majority in parliament, the bill easily passed. The only question is what will happen after it takes effect. According to Telex, the new legislation raises serious constitutional concerns, recalling that not long ago President János Áder requested a constitutional review of Hungary’s waste management law, because he believed companies shouldn’t be stripped of the ownership rights of their production and industrial waste without receiving compensation. Thus, the new regulation could ultimately suffer a similar fate.

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Featured photo by Zoltán Balogh/MTI


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