12 - Cartel Cases: From State Negligence to Direct Political Interest in Hungary

Summary

Introduction

The aim of this chapter is to elucidate the characteristics of cartels as a type of corporate crime in Hungary and consider the implications of such corporate crimes for the European region. In 1990, 40 years of socialist rule in Hungary ended. The former regime was a one-party system and planned economy with a hegemonic Marxist-Leninist ideological framework. This change moved the country towards a capitalist society based upon parliamentary democracy, a market economy, social, cultural and political pluralism, the protection of human rights and membership in the political, economic and military organizations of the ‘Western’ countries.

Corporate crime has been on the rise since the change of regime. Different forms of white-collar crimes had always existed under all of the previous political and economic systems in Hungary, but the transition period produced special opportunities for white-collar criminal activities, mostly for those who were close to the political parties and/or had good connections with the establishment (Inzelt, 2015). Several cases of corporate crime in Hungary that occurred between 1989 and 2000 have been analyzed in detail, such as the bank scandals involving Ybl Bank, Lupis brokerage, Agrobank and Postabank, the conversion of the Hungarian Venture Development Foundation, privatization irregularities, criminal bankruptcy and phantomization of firms, fraudulent reclaiming of VAT, the so-called ‘Energol case’, healthcare insurance fraud, cartels and the corruption of politicians (see Inzelt, 2011).

It is of the utmost importance to understand the circumstances which promote cartels and corporate crime, as cartel-associated behaviours, such as restrictive agreements and unfair competition practices, generate significant harms to the morals of society and to victim organizations (those businesses which lose out due to cartel activities), as well as damaging public confidence (Jávor and Jancsics, 2013). More specifically, this chapter explores and elucidates the complex interrelationships between corporate crime and the functioning of the Hungarian market economy (Tóth, 1995).

In Hungary, European competition law has been implemented into the legal system. The Hungarian Competition Authority (HCA) and the Hungarian courts have to apply EU competition law to all restrictive agreements and dominant abuses applied (or applied in parallel) by Hungarian competition law and which may affect trade between EU member states. The effect of trade among EU member states is a complex topic, which means that conduct can have an actual, potential, indirect or direct impact on competition in an international dimension.