The European Commission has launched legal proceedings against Hungary at the Court of Justice of the European Union (CJEU), seeking the removal of retail margin restrictions imposed on certain food products and drugstore articles.
The dispute centres on measures introduced by the Hungarian government in 2025 as part of its efforts to contain inflation. Under the rules, retailers were required to limit their margins on selected food products to 10 per cent, while certain drugstore goods were subject to a maximum margin of 15 per cent. The measures were initially introduced as temporary restrictions but were repeatedly extended before being incorporated into permanent legislation. The Commission argues that the Hungarian rules disproportionately affect foreign-owned retailers operating in the country and violate fundamental principles of the EU single market.
According to Brussels, Hungary’s regulations prevent companies from setting prices in a way that allows them to cover their actual operating costs. The Commission said Budapest incorrectly treats the difference between a product’s purchase price and its selling price as equivalent to company profit, while ignoring significant additional expenses such as employee costs, transportation, storage, property expenses and taxation.
‘Retail margins are not the same as profits,’ the Commission argued, pointing out that retailers typically use margins to cover the wide range of costs involved in operating stores. According to EU estimates, average margins in food retail and drugstore sectors are significantly higher than the profit levels ultimately earned by companies. The Commission said that food retailers typically operate with average margins of around 30 per cent, while drugstore retailers have average margins closer to 35 per cent. However, actual profits are much lower, generally estimated at around 3–4 per cent.
Brussels argues that by imposing maximum margins while simultaneously requiring retailers to maintain previous sales volumes, Hungary has created a situation where companies may be forced to sell products below cost. The Commission also warned that the measures could discourage new businesses from entering the Hungarian market. The European Commission considers the Hungarian regulations incompatible with EU rules on freedom of establishment and the Services Directive.
Under Article 49 of the Treaty on the Functioning of the European Union (TFEU), EU citizens and companies must be able to establish and operate businesses across member states without unjustified restrictions. The Services Directive similarly requires governments to ensure equal treatment of economic operators and avoid discriminatory measures unless they are justified by overriding public interest objectives.
The Commission has opened two separate infringement cases against Hungary. One concerns restrictions affecting the sale of selected food products by retailers, while the other relates to margin limitations applied to certain non-food products sold by drugstores.
The first infringement procedure concerns food retail restrictions under case number INFR(2025)2052, while the second focuses on drugstore products under case number INFR(2025)2102.
The Hungarian government introduced the margin caps as part of a broader strategy to combat high inflation and reduce consumer prices. Officials have argued that large retailers, particularly multinational chains, have significant pricing power and that the restrictions help protect Hungarian households from excessive price increases. Budapest has previously indicated that it was prepared to challenge the European Commission’s position, arguing that the measures serve legitimate consumer protection goals.
The Commission’s decision follows several stages of infringement proceedings. Brussels first sent formal notices to Hungary in June 2025, requesting changes to the legislation. After Hungary failed to resolve the concerns, the Commission issued reasoned opinions later that year.
As the dispute remained unresolved, the Commission decided to refer the matter to the Court of Justice of the European Union.
The court case will now determine whether Hungary’s retail margin regulations comply with EU law and whether national governments can impose similar price controls without breaching single-market rules.
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