The European Commission has taken Hungary to the Court of Justice of the European Union over rules that cap retail margins on certain food and drugstore products, escalating a dispute over measures Budapest introduced in 2025 to fight inflation.
At the center of the case are Hungarian rules that required retailers to keep margins on selected food products at 10 per cent and on certain drugstore goods at 15 per cent. The measures were first presented as temporary, but were extended several times and later written into permanent legislation.
Brussels argues the restrictions breach key EU single market rules and place a disproportionate burden on foreign-owned retailers in Hungary. The Commission has opened two separate infringement cases: one covering selected food products sold by retailers under case number INFR(2025)2052, and another covering certain non-food products sold by drugstores under case number INFR(2025)2102.
The Commission said the Hungarian system prevents businesses from setting prices in a way that reflects their real operating costs. According to Brussels, the government wrongly equates the gap between a product’s purchase price and sale price with profit, without accounting for costs including wages, transport, storage, property expenses, and taxes.
"Retail margins are not the same as profits", the Commission argued.
The Commission said average margins in food retail are around 30 per cent, while drugstore retailers average closer to 35 per cent. Actual profits, however, are "generally estimated at around 3–4 per cent", according to the source article.
Brussels also said the measures, combined with a requirement for retailers to maintain previous sales volumes, could force companies to sell goods below cost. It warned that the rules may also deter new firms from entering the Hungarian market.
The legal challenge rests in part on Article 49 of the Treaty on the Functioning of the European Union, which says EU citizens and companies must be able to establish and run businesses across member states without unjustified restrictions. The Commission also cited the Services Directive, which requires equal treatment of economic operators unless different treatment is justified by overriding public interest objectives.
Hungary introduced the caps as part of a broader effort to curb high inflation and lower consumer prices. Officials have said large retailers, especially multinational chains, hold significant pricing power, and Budapest has argued the measures support legitimate consumer protection goals.
The case follows earlier infringement steps by the Commission. Brussels sent formal notices to Hungary in June 2025 and later issued reasoned opinions after saying the concerns had not been resolved.
The court will now decide whether Hungary’s retail margin rules comply with EU law and whether national governments can impose similar price controls without breaching single-market rules.
