EU orders Hungary to drop food price cap on foreign retailers

By Foo ‌Yun Chee and Inti Landauro

BRUSSELS, Dec 11 (Reuters) - The European ‍Commission on ‌Thursday ordered Hungary to scrap a limit set on retail price ⁠margins on food products and ‌drugstore articles levied on non-Hungarian retailers or risk legal action.

In response, Hungary's Economy Ministry said in a statement it would keep the restrictions and ⁠was ready to challenge Brussels on the issue. Hungary has endured the European Union's ​worst inflation surge since Russia's 2022 invasion of ‌Ukraine and in March imposed ⁠a 10% limit on retail margins for 30 food staples in response to resurging prices. Since then, the government has repeatedly ​extended the duration and expanded the range of products that fall under the measures, which now apply until February 28, 2026.

The retail price margin cap drew protests from foreign retailers and some ​have urged ‍the Commission to take ​action against Budapest, arguing that the measures disproportionately targeted foreign companies as only some Hungarian retailers were affected.

The Commission said on Thursday that it had sent reasoned opinions, in effect a formal request to comply with EU law, to Hungary, giving it two months ⁠to respond and take measures or risk being taken to court.

Austrian retailer SPAR Group said the ​Commission's reasoned opinion is "a milestone in tackling unlawful retail restrictions".

"The Commission should use all available means to protect European businesses and consumers within the framework of the EU Single ‌Market," said SPAR CEO Austria Group Hans K. Reisch.

(Reporting by Inti Landauro and Krisztina Than; editing by Foo Yun Chee and Tomasz Janowski)