A measure born to contain price increases and which over time has become a European issue. The restrictions introduced by Hungary on sales margins for certain food products and grocery items have led Brussels to open a dispute that now reaches the Court of Justice of the European Union.
The referral represents the latest chapter in a long confrontation between the European Commission and Budapest over price control policies and the compatibility of such measures with single market rules.
HUNGARIAN MEASURES AGAINST PRICE INCREASES
As explained by the European Commission, in 2025 Viktor Orbán’s government introduced a series of limits on margins applicable by retailers on certain products, as part of a strategy to counter inflation and reduce shopping costs for consumers. The new rules provided for a 10% cap on sales margins for some basic food products – including chicken, milk, oil, and sugar – and 15% for certain items sold in grocery stores.
The provisions particularly concerned large distribution operators and, according to the Commission, mainly affected non-Hungarian companies operating in the national market. Budapest authorities initially introduced the measures as temporary but later extended their application until turning them into permanent rules in May 2026.
After the change of government, the executive led by Péter Magyar also decided to keep the limits in force without setting a date for their removal. While distancing themselves from the previous Orbán government’s economic approach, several majority representatives explained that an immediate removal of the restrictions could cause a sudden increase in consumer prices.
THE DISPUTE OVER THE CONCEPT OF MARGIN
At the heart of the dispute is a different interpretation of the role of sales margins. The Hungarian government considers the difference between the purchase price of a product and its selling price as an element comparable to the profit of the companies involved.
The European Commission contests this approach, emphasizing that the commercial margin also serves to cover numerous operating costs, including personnel, transport, warehouse management, real estate, and taxes. According to Brussels, in the food retail sector, the average margin is around 30%, while in grocery stores it reaches about 35%. The actual profit of companies would generally be much lower, around 3-4%.
For this reason, the Commission believes that setting a 10% margin limit could prevent retailers from covering management costs, forcing them in some cases to sell certain products at a loss.
THE POSITION OF THE EUROPEAN COMMISSION
Brussels also considers that the simultaneous application of a maximum margin limit and the obligation for retailers to maintain the same sales volumes as before the introduction of the measures can create difficult economic conditions for operators already present in the market.
According to the Commission, the system also has a discriminatory profile. The turnover threshold provided by the regulation would in fact involve almost all large foreign-capital distribution groups operating in Hungary, including Spar and Penny Market, while leaving out many smaller Hungarian companies.
The Commission also argues that the Hungarian rules may hinder the entry of new companies into the sector and violate European principles on freedom of establishment and freedom to provide services. For this reason, it believes that the measures adopted by Budapest are incompatible with the Services Directive and Article 49 of the Treaty on the Functioning of the European Union.
THE LAUNCH OF THE INFRINGEMENT PROCEDURE
The European Commission has therefore initiated two separate procedures against Hungary. The first concerns the limits applied to the sale of certain food products by retailers in the food sector and is identified with case number INFR(2025)2052. The second concerns similar restrictions for some non-food products sold in grocery stores, with case number INFR(2025)2102.
Brussels had sent letters of formal notice to Hungary in June 2025, requesting changes to the legislation. After the failure to resolve the issues raised, the Commission subsequently sent reasoned opinions in December of the same year.
THE APPEAL TO THE EU COURT OF JUSTICE
After the failure to reach an agreement between the parties, the Commission decided to refer Hungary to the Court of Justice of the European Union. The proceedings will have to determine whether the margin limits imposed by the Hungarian government are compatible with European rules governing the functioning of the single market, particularly with freedom of establishment and freedom to provide services.
Domestically, according to Euractiv, the debate remains open. The governor of the Hungarian central bank, Mihály Varga, recently stated that improved inflation prospects would offer the government room to gradually eliminate price controls. On the contrary, the executive led by Magyar continues to defend the regulatory framework, arguing that the restrictions are a necessary tool to protect consumers and contain the cost of living.
OTHER DISPUTES BETWEEN BRUSSELS AND BUDAPEST
The new appeal is part of a long-standing confrontation between Brussels and Budapest over price control policies in retail trade. In April last year, the Commission had already referred Hungary to the Court of Justice over the special tax applied to large retailers, another measure introduced during the Orbán government and still in force today. Among the main opponents of the measure, Euractiv recalls, is Spar, which has repeatedly called for its abolition, arguing that it is causing significant economic damage to retailers. Austrian Chancellor Christian Stocker, during a meeting in Vienna with Magyar, also urged the Hungarian government to eliminate the tax but received the response that public finance difficulties still do not allow for its removal.
Strengthening the Commission’s position was also a recent ruling by the Court of Justice of the European Union, which declared incompatible with European law a 2023 Hungarian decree that required supermarkets to apply mandatory discounts and maintain minimum stock levels. The decision, writes Euractiv, was a victory for Penny Market, a chain of the German REWE group, which had challenged the regulation before the European judges.
The Court will now also be called upon to rule on the legitimacy of the sales margin limits, adding a new chapter to the clash between Brussels and Budapest over single market rules.
