Foreign-owned retail chains are under scrutiny in Hungary in a bill presented to parliament by the Minister of the Economy Mihály Varga.

Under the new proposals large, usually foreign-owned retailers, with a €163 m annual turnover will be forced to operate at a profit for two years or face shutdown.

The big retailers are already taking on board a huge rise in government inspection costs.

András Mihálovits is a business journalist in Budapest:“It seems obvious that the retail chains owned by Hungarians won’t be affected, or not affected adversely by these government moves. In fact the situation creates a huge market opportunity for them. It is also conceivable, that some of the retail chains will decide not to operate in the Hungarian market, simply because it is not worth it and they will exit the country.”

Companies in the €163 m euro annual turnover bracket include Aldi, Auchan, Metro and Spar all lossmakers and Tesco and Lidl.

The government suspects they are operating at a loss for competition purposes.

Shoppers fear the consequences:
“It could lead to many layoffs, lower salaries, that is the opposite what the government wants which is job creation.” said one consumer.

Sunday openings is also an issue:
“They should be open, on Sundays people shop, “ said another.

Spar has reacted by saying it would postpone a significant part of its planned investments over the coming years.

French supermarket Auchan added the measures discriminate against foreign firms, while Britain’s Tesco said it would assess the impact on its business.

Discussions between the government and retailers are ongoing.

Our correspondent in Budapest Andrea Hajagos says: “The results of the talks have yet to be revealed. With the government and retailers keeping their cards close to their chests until the negotiations are completed.”