Two EU proceedings were initiated against the Hungarian government, and the fine was closer to one

The European Commission initiated infringement procedures for highway concessions and (after a previous procedure) for higher education services, and in a case previously initiated due to asylum rules, it sent a letter of notice, which may eventually result in a fine.

On the basis of its announcement on Wednesday, the board decided to initiate infringement proceedings against Hungary and Spain for violating the rules of highway concession contracts by means of a letter of notice. The purpose of the letters is to ensure that member states comply with EU rules on concessions. They require transparency and equal treatment of economic operators who are interested in public procurement procedures.

The European Commission has revealed various problems with Hungarian motorway concession contracts. According to his point of view, the concession granted by the Hungarian government for 35 years

the estimated contract value was not transparent, it does not transfer the operational risk to a sufficient extent, and it is for an unreasonably long time, which violates EU law.

From now on, it is necessary to respond to the committee’s arguments within two months. If the government gives no or weak justification, a reasoned opinion will be issued, which may be followed by a lawsuit and then a fine.

We wrote about the plans of the concession in June 2021, and about its oddities in this article. The concession was won by a consortium linked to Lőrinc Mészáros and László Szíjj in May 2022. It was given tasks such as the construction of new expressways, lane expansion and operation and maintenance for 35 years. According to the G7’s calculations, the consortium can earn 700 billion forints during this period, and in four months it was able to record a profit of 6.5 billion.

Already in June 2021, Transparency International turned to the European Commission because, according to the organization, the extremely long-term contract, which was only leaked at the time, could violate EU directives. In August 2022, Sándor Rónai, a member of the European Parliament from DK, posted that, in his opinion, the European Commission was “examining the various elements of the contract” following his signal, but there was no talk of an official procedure at that time. In April 2023, Portfolio wrote about a possible competition law procedure due to a received complaint – the paper knew this because, according to some market participants, the role of subcontractor can be fulfilled by “only a narrow circle”. In November of last year, Minister of Construction and Transport János Lázár justified the decision by saying that, according to him, the current solution can ensure the competitiveness of nationally owned construction companies and the retention of the capacities necessary for their successful participation in tenders. Prime Minister’s Chief of Staff Antal Rogán previously spoke about the fact that the company’s connection to Mészáros and Szíjj was not a factor in the consideration.

With regard to asylum rules, we are already past the litigation stage of the procedure, where it was established in June 2023 that Hungary did not fulfill its EU obligations. The EU court ruled that the Hungarian authorities violated an EU directive by not providing third-country nationals or stateless persons with effective access to the international protection procedure. According to Hungarian legislation, in order to request international protection, third-country nationals must first submit a declaration of intent at a Hungarian embassy outside the EU. In it, they must indicate that they wish to apply for asylum, and they must also have a special entry permit issued for this purpose. (We wrote more about the judgment here.)

The European Commission has not received information from the government on how it has rectified the violation since the trial, and therefore believes that it has not fulfilled its obligation to comply with the court ruling.

The government has two months to respond to the demand letter. In the light of the response received, the European Commission may, where appropriate, decide to refer the case back to the European Court of Justice and recommend the imposition of financial sanctions.

In addition, the European Commission has decided to initiate infringement proceedings against Hungary by means of a letter of formal notice, for not fully complying with EU law and for not implementing an EU court judgment. The announcement does not name it, but it is about the CEU case.

The legislation leading to the university’s departure was voted by parliament in April 2017. Three weeks later, the European Commission launched an infringement procedure against Hungary, as they believe that the law restricts the freedom to provide services and freedom of establishment. The EU court ruled in this case in October 2020.

The board found that Hungary violated EU legislation and the General Agreement on Trade in Services because, in the case of foreign higher education institutions outside of the European Economic Area (the EU plus Iceland, Lichtenstein and Norway), it tied two conditions to the degree-granting training activities in Hungary. Hungarian legislation stipulated that an international treaty must exist between the Hungarian government and the government of the state where the relevant institution is based. It was also stipulated as a condition for activity in Hungary that the educational institution must provide higher education training in the country of its headquarters (also in the case of EEA member states).

The new legislation adopted in May 2021 no longer includes the second mentioned requirement, but the first one is still required according to the European Commission, which also violates the EU Charter of Fundamental Rights, which is why it is sending a letter of warning to the government. You have two months to respond and remedy the deficiencies, otherwise the case may be brought before the Court of Justice of the European Union. In cases brought here for the second time, financial sanctions may be imposed retroactively for the period that has passed since the first judgment was rendered, until full compliance.