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The European Commission has referred Hungary to the Court of Justice at the European Union (CJEU) over controversial retail price margin restrictions that Brussels says unfairly target foreign-owned retailers and undermine competition in the country’s food sector.
The legal action centres of Hungarian measures introduced in 2025 that capped retail margins at 10% for selected food products under Government Decree 42/2025.
The commission argues that the rules effectively force retailers to sell certain products below cost by failing to account for the significant operating expenses involved in bringing goods to consumers.
According to the Commission, food retailers typically require gross margins of around 30% to cover costs such as staffing, transport, warehousing, rent and utilities, despite operating on net profit margins of just 3-4%. By limiting the difference between purchase and selling prices to 10%, the legislation leaves retailers unable to recover these operating costs.
The Commission also objects to a requirement that retailers maintain sales volumes of affected products at levels recorded before the price controls were introduced. It says the combination of mandatory supply volumes and capped margins creates unavoidable financial losses for existing operators while discouraging new entrants from investing in the Hungarian retail market.
Although Hungary initially presented measures as temporary interventions to address inflation, the restrictions were repeatedly extended before being incorporated into permanent legislation in May 2026 through amendments to the country’s commerce law.
Brussels argues that the Hungarian government incorrectly equates the gap between wholesale purchase prices and retail selling prices with profit, overlooking the substantial operational costs retailers incur throughout the supply chain.
The Commission maintains that the measures disproportionately affect predominantly foreign-owned retailers and breach EU rules on freedom of establishment under Article 49 of the Treaty of the Functioning of the European Union, as well as the Service Directive. It contends that the legislation imposes discriminatory and disproportionate restrictions on businesses seeking to operate in Hungary’s retail sector.
The referral follows infringement proceedings launched in 2025. The Commission issued formal notices in June that year, followed by reasoned opinions in December after concluding that Hungary failed to address its concerns.
Alongside the food retail case, the Commission has also referred a separate but related case concerning similar margin restrictions on selected drugstore products, where retail margins were capped at 15%.