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Hungarian Government Adopts New Decree to Tackle Shrinkflation

Hungarian Government Adopts New Decree to Tackle Shrinkflation

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Most of us have likely encountered a situation where we bought our favourite chocolate at the grocery store, only to be surprised upon opening it at home to find that the size and weight of the chocolate had decreased, while the packaging and price remained unchanged.

This phenomenon is called shrinkflation, which can occur not only with chocolate but with any pre-packaged product. To reduce or prevent this phenomenon, the Hungarian government has adopted Government Decree No. 1/2024. (I. 9.), which will come into effect on 1 February 2024. The decree imposes obligations on both retailers and manufacturers. If a specific product, defined as any pre-packaged item placed on the retail market and sold uniformly by the retailer in one or more size categories, is introduced to the market with significantly reduced weight or volume compared to the product manufactured by the producer between 1 January 2020 and 1 July 2023, the retailer is obliged to publish informative notices indicating the packaging change for the respective product. This obligation extends for a period of two months from the commencement of the product's distribution. The decree must also be applied in cases where the affected product was placed on the market between 1 July 2023 and 1 February 2024, and the retailer continues to sell the product. If the retailer started selling the product between 1 July 2023 and 29 February 2024, and continues to sell the product, the obligation to inform consumers must be fulfilled starting from 1 March 2024.

Hence, if, for instance, the weight of a product decreases by 10%, while the price remains either unchanged or increases, the product is subjected the retailer's disclosure obligation.

The retailer is exempt from this obligation if the manufacturer introduced the new, smaller packaging unit without discontinuing the previous packaging units within six months, and the retailer continues to sell the previous packaging units.

To meet the retailer's disclosure obligation, in the case of manufacturing in Hungary, the responsibility lies with the manufacturer. In other cases, the first entity introducing the product into the Hungarian market, along with the wholesaler, are obliged to provide information to the retailer in the product's accompanying documentation or in writing through other means regarding the reduction in the product's packaging and the discontinuation of the previous packaging units.

The Hungarian manufacturer or the entity introducing the product into the Hungarian market for the first time, including wholesalers, must also provide the information given to the retailer to the National Food Chain Safety Office.

If the parties involved fail to meet their disclosure obligations, they may be subject to a consumer protection fine of HUF 1m (approx. EUR 2,580) per product.

By Daniel Gera, Office Managing Partner, and Akos Kovacs, Associate, Schoenherr

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