HÁLÓZATI GYÓGYSZERTÁRAK SZÖVETSÉGE A OSTATNÍ proti Maďarsku

SECOND SECTION

DECISION

Application no. 66925/12
HÁLÓZATI GYÓGYSZERTÁRAK SZÖVETSÉGE and Others
against Hungary

The European Court of Human Rights (Second Section), sitting on 14 May 2013 as a Chamber composed of:

Guido Raimondi, President,
Danutė Jočienė,
Dragoljub Popović,
András Sajó,
Işıl Karakaş,
Paulo Pinto de Albuquerque,
Helen Keller, judges,
and Stanley Naismith, Section Registrar,

Having regard to the above application lodged on 16 October 2012,

Having deliberated, decides as follows:

THE FACTS

The first applicant, Hálózati Gyógyszertárak Szövetsége (“HGYSZ”) (“Association of Pharmacy Networks”), is an association registered under Hungarian law, with its seat in Budapest. The other applicants (listed in the Annex) are members of the first applicant. They are companies registered under Hungarian law. The applicants were represented before the Court by Mr J. F. Bellis, a lawyer practising in Brussels.

The facts of the case, as submitted by the applicant, may be summarised as follows.

The applicants listed in the Annex are companies which operate pharmacy networks in Hungary and are as such members of the first applicant, HGYSZ. Each member of HGYSZ holds shares (usually majority shares) in a number of different pharmacies or directly operates (usually more than four) pharmacies. As a result of their respective shareholdings, HGYSZ members own part of the equity, take part in the management and share the profits of a number of pharmacies in Hungary.

Between 1990 and 1994, the operation of pharmacies in Hungary was governed by Regulation no. 9/1990, under which the opening of new pharmacies was allowed without any geographic or demographic limitation. During this period, the number of pharmacies in Hungary increased by about 30% to approximately 2,000 pharmacies.

From the adoption of Act no. LIV of 1994 onwards, and until 2006, the operation of pharmacies was governed by different rules, according to which the opening of new pharmacies was still without obstacles and the privatisation of existing pharmacies organised in a company form was possible. However, geographic and demographic barriers were introduced to the opening of new pharmacies, requirements concerning inter alia the qualification of pharmacists and their influence on the management of the pharmacies were applied, and the legal form of companies that may operate pharmacies was prescribed. At the same time, there was no limitation on the number of pharmacies that may be operated by one entity, provided the relevant sector-specific conditions were met.

In 2006, new rules contained in Act no. XCVIII of 2006 (“the Gyftv.”) abolished most limitations on the establishment of pharmacies and the legal form of companies that may operate pharmacies.

Between 1994 and 2010, a number of foreign investors entered the Hungarian pharmaceutical retail market by acquiring shares in pharmacies. The majority of HGYSZ members’ shareholdings date back to the period between 1994 and 2006. Despite the limitations in place between 1994 and 2006, there was no indication that shareholdings in pharmacies would be limited or that any future limitation on shareholdings would affect already existing shareholdings in pharmacies.

At the end of 2010, Hungarian legislation introduced limitations on the shareholdings in pharmacies. These limitations, which Act no. CLXXIII of 2010 (“the Act”) incorporated into the Gyftv. – as of 1 January 2011 – require that the shareholdings of pharmacists in the pharmacies where they work must exceed 25% by 1 January 2014 and 50% by 1 January 2017 and moreover that no one may have shares in more than four pharmacies. The restrictions do not only apply to pharmacies which are established after the amendments entered into force, but also ownership in already existing pharmacies must be brought in line with the limitations by the respective deadlines of 1 January 2014 and 1 January 2017. Moreover, any change in the ownership of the non-pharmacist shareholders entails an immediate obligation to meet the above thresholds, even before the deadlines of 1 January 2014 and 1 January 2017. The amendments do not contain any guarantee for an appropriate compensation of those shareholders who are obliged to give up part of their shareholdings.

The 2010 amendments introduced by the Act entail in particular the limitations outlined below.

Previously, in cases where pharmacies were operated by enterprises, it was sufficient for the pharmacist exercising the professional leadership of the pharmacy concerned to have a 1% share in the enterprise operating that pharmacy. Pursuant to the amendment to section 74 (1) of the Gyftv., introduced by section 84 (1) of the Act, enterprises are now only allowed to operate pharmacies if the combined shares of the pharmacist exercising the professional leadership of the pharmacy concerned and the pharmacist(s) employed in the pharmacy exceed 50%.

According to section 83/A (1) of the Gyftv, introduced by section 87 of the Act, these ownership rules enter into force between 1 January 2011 and 1 January 2017 according to the following schedule:

Between 1 January 2011 and 31 December 2013, with some exceptions (such as the death of the pharmacist), changes in the ownership structure of the enterprise operating a pharmacy entail an immediate obligation under which the combined shares of the pharmacist exercising the professional leadership of the pharmacy and the pharmacist(s) employed in the pharmacy must exceed 25%.

Between 1 January 2014 and 31 December 2016, the combined shares of the pharmacist exercising the professional leadership of the pharmacy and the pharmacist(s) employed in the pharmacy must exceed 25% and, again with some exceptions, changes in the ownership structure of the enterprise operating a pharmacy entail an immediate obligation under which the combined shares of the pharmacist exercising the professional leadership of the pharmacy and the pharmacist(s) employed in the pharmacy must exceed 50%.

As of 1 January 2017, the combined shares of the pharmacist exercising the professional leadership of the pharmacy and the pharmacist(s) employed in the pharmacy must exceed 50%.

According to section 83/A (4) of the Gyftv., introduced by section 87 of the Act, once the combined shares of the pharmacist exercising the professional leadership of the pharmacy and the pharmacist(s) employed in the pharmacy have exceeded 50%, it is prohibited, even before the time‑limit of 1 January 2017, to reduce those combined shares to 50% or below.

The applicants submitted that it was difficult to estimate the exact value that they would obtain in exchange for the shares they were required to transfer to pharmacists by 1 January 2017. However, they argued that, in the absence of any provision concerning compensation for the required transfer of shares and in light of the limited financial means of pharmacists in Hungary, the price offered for the shareholdings in question would inevitably be substantially below pharmacies’ normal market value. Indeed, the limited number of cases where HGYSZ members had sold shares since the beginning of 2011 showed that, subsequent to the amendments made to the Gyftv. in 2010, purchase prices were far below the market value.

Moreover, before the amendments introduced by the Act, there was no restriction on how many pharmacies a single shareholder could have shares in. Pursuant to the amendment to section 74 (3) of the Gyftv., introduced by section 84 (2) of the Act, companies that have shares in enterprises operating four or more pharmacies cannot acquire or hold shares in an(other) enterprise operating pharmacies.

Furthermore, section 73 (1) of the Gyftv., as amended by section 83 of the Act, as well as section 74 (5) of the Gyftv., as amended by section 84 (4) of the Act, give pharmacists increased powers in the decision-making of the enterprise that operates the pharmacy, regardless of their shareholding and their position in the enterprise, in derogation from Hungarian company law.

Given the shareholdings of HGYSZ members, the applicants would need to give up substantial shareholdings in order to bring their shares below the 75% threshold by 1 January 2014 and below the 50% threshold by 1 January 2017. Additionally, with the exception of one applicant that holds shares in only three pharmacies, all others would need to give up completely their shareholdings in a number of pharmacies in order to reduce the number of pharmacies in their respective networks to four. For instance, Pharmanova Zrt., the largest member of HGYSZ, which holds shares in 140 pharmacies, would need to surrender its shares in 136 pharmacies and reduce its shares in the remaining four pharmacies below 75% by 1 January 2014 and below 50% by 1 January 2017.

The value of the shareholdings that the applicants would need to give away – because of the restriction on the size of shareholdings – by 1 January 2014 is estimated at 5.8 billion Hungarian forints (HUF)[1], and the value of the shareholdings that they would need to surrender by 1 January 2017 is estimated at an additional HUF 9.9 billion[2]. These figures exclude the further shareholdings to be alienated on account of the restriction on the number of pharmacies owned by one shareholder, whose value will be dependent on the choice of pharmacies to be surrendered.

In the face of the forced sales of these shares representing a very substantial amount of money, the legislation does not guarantee any particular form of compensation.

On 5 June 2012 the Constitutional Court rejected, without an examination on the merits, HGYSZ’s complaint alleging that the amendments brought about by the Act amounted to a breach of constitutional rights. According to the decision, the complaint was inadmissible, partly because HGYSZ was not directly affected by the impugned provisions in that it could not possibly sustain a direct violation of any constitutional right in this context, and partly because the subject matter of the complaint was essentially the same as that of cases previously adjudicated by the Constitutional Court.

COMPLAINTS

The applicants complained under Article 1 of Protocol No. 1, read alone and in conjunction with Article 14 of the Convention, that the impugned legislation amounts to a discriminatory breach of their right to protection of property.

THE LAW

The applicants complained that the amendments to the Gyftv. enacted by virtue of the Act as of 1 January 2011 amounted to a discriminatory violation of their right to the peaceful enjoyment of their possessions, in breach of Article 1 of Protocol No. 1, read alone and in conjunction with Article 14 of the Convention.

Article 35 § 1 of the Convention reads as follows:

“The Court may only deal with the matter after all domestic remedies have been exhausted, according to the generally recognised rules of international law, and within a period of six months from the date on which the final decision was taken.”

The Court notes that the impugned legislative amendment entered into force on 1 January 2011. However, the application was introduced only on 16 October 2012, that is, more than six months later than this date. The Court considers that the first applicant’s constitutional complaint which was declared inadmissible without an examination on the merits does not qualify as an effective remedy and does not interrupt the running of the six-month time-limit. This is so because this complaint – partly rejected since it did not fall within the Constitutional Court’s jurisdiction and partly because it concerned matters which were essentially the same as in previously adjudged cases – could not possibly extend the six-month time-limit (see, mutatis mutandis, Posti and Rahko v. Finland, no. 27824/95, §§ 31 to 43, ECHR 2002‑VII). Moreover, the applicant’s submissions do not disclose any appearance of a “continuing violation” (compare and contrast Iacov Stanciu v. Romania, no. 35972/05, §§ 136 to 138, 24 July 2012); the Court reiterates in this connection that the concept of a “continuing situation” refers to a state of affairs in which there are continuous activities by or on the part of the State which render the applicant a victim (see Posti and Rahko, cited above, § 39). Complaints which have as their source specific events which occurred on identifiable dates cannot be construed as referring to a continuing situation (see Camberrow MM5 AD v. Bulgaria, (dec.), no. 50357/99, 1 April 2004).

It follows that the application must be rejected pursuant to Article 35 §§ 1 and 4 of the Convention.

For these reasons, the Court by a majority

Declares the application inadmissible.

Stanley Naismith Guido Raimondi
Registrar President

ANNEX

LIST OF APPLICANTS

[1] Approximately 19 million euros (EUR)

[2] EUR 32.4 million