Hungarian competition authority launches market analysis of 'green claims'

Update from 20/02/2023

On 14 November 2022, the Hungarian Competition Authority (HCA) initiated a market analysis to study green claims, and more specifically the commercial communications for Hungarian products, services and companies regarding environmental-impact claims.

The aim of the market analysis will be to identify the differences between the actual content of green claims and the perception of consumers. Based on the findings of this study, the HCA will propose legislation to establish a labelling and claim system, which could strengthen consumer confidence in environmental marketing in Hungary.

According to the HCA’s announcement, the market analysis will focus on green claims concerning food, clothing, household chemical products and cosmetics and will be conducted in the following three steps:

• Step 1 (December 2022): By conducting a sweep of the market, the HCA will identify green claims currently used by companies, and determine which claims and companies should be investigated further.
• Step 2 (January, February 2023): The HCA will investigate how green claims affect consumer perception of products and services and the willingness of consumers to buy these products. This investigation will include a controlled experiment (i.e. an online consumer survey) and requests for information from major companies.
• Step 3 (June, July 2023): The HCA will issue a discussion paper summarising its findings and proposals. (The first draft will be published in early June 2023 while the final report will be issued in mid-July).

The HCA has just announced that Step 1 has been completed. In line with the HCA’s press release, the sweep has revealed the following:

• Companies often use general terms (e.g. “green”, “environmentally friendly”) which are either not explained on their website or the explanation is very difficult to find. In addition, these explanations are often only available in English (typically through the parent company’s website).
• Businesses tend to use general slogans which are impossible to verify (e.g. “with your purchase, you are contributing to the realisation of our environmental goals”). In addition, these general slogans were found many times not to have been updated on the websites (e.g. “our goal is to achieve by 2021…”).
• Many companies substantiate the “greenness” of their operation with so-called trust marks and logos; however, the certification body is often not identifiable, while the criteria to be met to gain such certificates is often unavailable on their websites (or not in Hungarian).
• In some cases, the HCA found that companies used expressions like “more sustainable”, but it remained unclear to what extent and in comparison to which product the given product exerts a more favourable effect on the environment.

The HCA also emphasised that the sweep revealed some good practices being followed, including publishing a “green dictionary” and a detailed explanation of a company’s activity concerning sustainability (e.g. how and in what proportion the company recycles bottles, or how the company converts CO2 emissions associated with its activity into absorption credit). The HCA underlines that businesses could contribute to raising consumers’ awareness by publishing annual sustainability reports, especially if they use terminology based on their own criteria, which makes it easy to follow their sustainable goals and their respective fulfilment.

This explicit focus on green claims in Hungary is not unique, and is part of an emerging international trend. The European Commission and the competition agencies of the Netherlands and the UK conducted similar reviews in 2021 with more studies expected worldwide. (See our recent article on the topic).

In line with this trend, the aim of the Hungarian market study is to gain a general understanding on the use of green claims in the business community, their effect on consumers, and how this marketing should be regulated by law. In other words, the HCA is not yet focussed on sanctioning companies for individual green claims that may be unlawful.

It is highly likely, however, that competition control procedures will be brought down in the future against individual companies suspected of infringements on the basis of the current study, and that these results will also determine the enforcement priorities of the HCA concerning green claims.

In light of the above, Hungarian companies are advised to review their green claims and take proactive compliance measures in anticipation of increased regulatory scrutiny and potential questioning from the HCA.

Follow this link to view the HCA’s announcement (in Hungarian).

The article was co-authored by Márton Angyal. For more information on this study and advice on creating a compliance strategy regarding green claims for your Hungary-based company, contact your CMS client partner or local CMS experts: