I dare you to do business in Hungary...

Government to squeeze out Tesco, Aldi, Spar, Lidl and Auchan

Squeezing out foreign-owned retail chains is among the plans of the government, said János Lázár at an agricultural conference in December 2020. The next ten years, but really the next EU budget cycle is their timeline to accomplish that.

“Free market” “conservative” Orbán has announced his war against foreign-owned enterprises early on during his reign. His specific recipe was to overtake banking, media, energy and retail – and he wasn’t shy of repeating this laundry list over and over again, even teaching his Polish admirer, Kaczynski, to do the same.

First, the so called ’crisis taxes’ were introduced in 2010 on the energy, retail, and telecoms sectors – ostensibly in an attempt to control the budget deficit without austerity. However, they were also used by the Orbán government to put pressure on companies.

Banking, media, energy and retail” are the four sectors in which Orbán declared to aim for a majority share to go into “Hungarian hands”. But that was in 2014. In 2016 he declared victory in all but one sector.

„There are four sectors where national capital must grow above international one. These are the media, the banks, energy, and retail. We are done with the first three, but the fourth had proven to be difficult. Unfortunately retail chains are cleverer than us. (But) a few more years and we’ll complete this one too.”

PM Viktor Orbán, September 2016

By 2016, “Hungarians” (read: Orbán’s appointed cronies) held 60% of ownership in in media – but it wasn’t enough. In 2018, he created Europe’s largest media conglomerate (pardon, their respective owners decided to gift their media holdings to Orbán spontaneously). In 2020, the biggest bastion of independent media has been taken over and the ratio of Orbanized media is now closer to 93%.

The takeover of companies – by nationalization or forced buyouts – is often preceded by legal maneuvers to make the target companies unprofitable. While Orbán’s assigned cronies bought up every media outlet in Hungary, for instance, foreign banks were special taxed and fined until some of them have given up. Similarly, they have re-nationalized energy companies and pushed out every last private shareholder.

In an anonymous study, top managers described how it looked like from the inside.

“[T]hey are killing the economy with indirect tools, like tobacco legislation. They turn the retail trade of tobacco products into a state monopoly; and then they turn the retail of alcohol and lotto sales into a state monopoly as well. So, all private tobacco firms, alcohol firms, and Toto-lotto firms go bankrupt. This is how they create a market for their own economic empire.”

“As a result of this economic policy, a new oligarch circle has been created who took over a few sectors, like retail, media and construction.”

Sectoral taxes, financial crisis tax, legislation on Sunday opening times, they all served the goal to bring into position Hungarian chains and force the change of ownership in the sector. This has not happened yet. We feel that this goal is still there and we constantly have to pay attention to see how the government will try to force this change of ownership with legislative changes or other ways, so in this respect the role of the state is absolute dominant.”

Then they came up with a range of farcical micro regulations (and special taxes, naturally) to disadvantage foreign-owned retail chains.

Some retail chains have, however, have turned to European courts and scored a victory in 2015. But an autocrat cannot afford such a blemish on his rule. As Orbán’s right hand man put it: You may have fought off this one but our intention is clear. And we will come for you ultimately.

The year is 2020. Orbán’s former top minister – now in political exile and seemingly nurturing treasonous leadership ambitions – announced that the time has come and foreign retail chains will be squeezed out.

Of course, the European Union can stop that.

(LOL. Just kidding, they won’t.)

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