According to Regulation 2025/40 of the European Parliament and the Council on packaging and packaging waste, starting from 1 January 2029, only non-profit organizations will be allowed to operate mandatory deposit return systems (DRS) for beverage packaging. Currently, in Hungary, this system is fully operated by MOHU MOL Hulladékgazdálkodási Zrt. (MOHU).
This regulation poses a serious challenge to the operator of Hungary’s bottle return system, as it is binding in all EU Member States and sets two key minimum requirements for organizations running DRS systems. Firstly, these organizations must operate on a non-profit basis; secondly, they must exclusively focus on bottle return activities. Since 2023, the Hungarian State has granted MOHU a 35-year concession covering most of the domestic waste market. This completely contradicts the non-profit requirement, since MOHU operates as a for-profit entity. Furthermore, under the concession contract, MOHU is also responsible for municipal (household) and institutional (corporate) waste collection, the operation of the extended producer responsibility (EPR) system, and the DRS itself. This means the other minimum requirement would also be violated, as MOHU is not exclusively engaged in DRS activities, contrary to what the EU regulation mandates.
Nevertheless, there appears to be a loophole in the system: the EU regulation allows that if a Member State has already implemented a mandatory DRS, the same company may continue to operate it, provided that the bottle return rate reaches 90% by 31 December 2028.
Achieving the 90% return rate will be a significant challenge for MOHU. Operating as a for-profit company, it receives the deposit fee upfront: manufacturers pay the deposit fee to MOHU upon putting bottles into circulation. When the bottles enter the commercial chain, retailers (both small and large) pay this fee to the manufacturer, and then retailers recoup it from consumers when they buy the product, paying the added deposit fee. It is ultimately up to consumers to claim back this deposit by returning the bottles. If consumers choose not to return the bottles, the prepaid deposit stays with MOHU, which currently uses these funds to cover the operating costs of the DRS. As a market-oriented company, MOHU’s financial interest would theoretically be better served if fewer consumers returned the bottles. However, this runs counter to the requirement to achieve a 90% return rate to continue operating the national DRS.
In summary, MOHU now has roughly three and a half years to reach the 90% return rate if it wants to keep operating Hungary’s DRS in its current form. If it fails, the operation must be handed over to a non-profit organization dedicated exclusively to bottle return, in line with already existing practices common in other EU Member States.
By Gabriella Galik, Founding Partner, KCG Partners Law Firm
