Earlier we heard the plan for a pig in every household. Lately a new program is being hatched within the walls of the Ministry of Economics under the watchful eye of György Matolcsy. The new Hungarian government doesn’t like hypermarkets, especially if they are owned by foreigners. Of course, it is a different matter if the owner is a Hungarian, especially a Hungarian who is expanding his business in the “Carpathian Basin.” In that case, he receives a decoration on October 23. Here is the moment when László Baldauf, CEO of the Hungarian-owned supermarket chain CBA, is receiving the high honor from the hands of Pál Schmitt, the President of the Republic:
The expansion in the Carpathian Basin may be viewed as a patriotic gesture, but Viktor Orbán is perhaps even more grateful for the financial and moral support Baldauf has given him in the past few years. All the advertisement his party received on the fliers of CBA and those huge roadside billboards in front of Baldauf’s stores saying: ” Day of Reckoning, April 11, 2010.”
The “plazastop” movement began fairly innocently more than a year ago when Gábor Scheiring (LMP) during a parliamentary debate about the extra levy on supermarkets mentioned that the government’s ideas about the levies were close to those of LMP but that his party would prefer “a temporary plazastop” instead. Scheiring found it “interesting that the three Hungarian-owned chains, Coop, Reál and CBA,” were exempt from the levy.
A few months later LMP came up with a draft bill that would place a moratorium on building large supermarkets or shopping centers. The moratorium, according to the LMP plan, was supposed to last for six months and would be applicable to establishments larger than 400 m2 (4,300 ft2) in the case of localities with a population of fewer than 100,000 and 800 m2 (8,600 ft2) when the population was over that number. Obviously, Fidesz and the Orbán government liked the idea and the two-thirds majority quickly agreed to discuss the matter at their earliest convenience. By the end of September the Fidesz members began to fiddle with the original LMP proposal in such a manner that within a few days LMP withdrew their bill and refused to support the law that was shaping up under government sponsorship.
While LMP wanted to have a law that would hand over the decision about building a supermarket or a shopping center to the communities, the Fidesz proposal gave that decision-making power to a government agency within a ministry. Moreover, the moratorium would involve all establishments over the size of 300 m2 (3,230 ft2). And the “plazastop” would be in effect from January 1, 2012 until December 31, 2014.
All the business associations and experts on commercial transactions condemned the idea of a “plazastop” from the very moment LMP came up with the idea. Real estate developers were the most vocal. They reminded the politicians that there are even today rules and regulations governing the building of commercial establishments. Given the unemployment figures, the association of real estate developers objected to the very idea of a moratorium. The building industry wasn’t exactly thrilled either.
Because of the sagging economy supermarket expansion has been on hold. For example, Auchan announced that this year they were unable to open new stores.They were, however, planning to open five new stores in 2012. Well, that is taken care of by the new law concocted by the Fidesz government. At present Auchan has 12 stores with 5,600 employees. Another five stores would certainly have helped the Hungarian employment figures.
It was on November 4 that Napi Gazdaság first mentioned the possible connection between the “plazastop” law and the Hungarian-owned CBA’s special interests in the matter. The French-Belgian owned chains Match, Cora, and Profi are apparently for sale and “there are talks that perhaps Hungarian owned chains are interested.” A few days later another article appeared in the same paper about the particulars of a possible deal. According to the newspaper the new law “serves the interests of only CBA and Coop,” another Hungarian-owned chain. The value of these large supermarkets would grow considerably if no similar establishments could be built anywhere in the country for two years. Napi Gazdaság even brought up the possibility that the real purchaser wouldn’t be CBA and Coop but the Hungarian state itself. After all, Viktor Orbán’s draft speech contained a reference to a government-owned supermarket chain which in the last minute he left out from the delivered version. We know all about this because of the photographer who took a picture of Viktor Orbán from the gallery above the podium.
In any case, DK (Demokratikus Koalícó) today announced that the party considers the “plazastop” a move that limits fair competition. The party is asking the Office of Economic Competition (Gazdasági Versenyhivatal) to look into the matter. DK seems to know that the government is helping out CBA and Coop with low-interest lines of credit via the state-owned Magyar Fejlesztési Bank (Hungarian Investment Bank). At the same time Ágnes Vadai (DK) is writing a letter to György Matolcsy inquiring about the legality of the Hungarian state putting certain companies into a favorable position vis-à-vis their competitors. Such a move, in her opinion, is not in sync with the rules and regulations of the European Union.
While the government is putting all sorts of restrictions on supermarket chains, it is making it easier for small farmers to sell their produce without any permits or supervision. Small producers of edible goods will only have to announce their plans to market their products. LMP is a willing partner in this scheme. In Szombathely, for example, the local LMP members of the city council managed to convince their colleagues to allow anyone with a vegetable garden or a few chickens to sell their goods right in front of their house. Mind you, only on one square meter.
This government has interesting ideas. They want to stop time. They want to reorganize Kossuth Square to reflect a bygone and not at all happy time, as things were on March 18, 1944. They want to stop the inevitable development of larger business units in favor of small farmers selling their produce in front of their houses. Where will all this lead? Nowhere good.