Hungary’s 2026 political transition presents an opportunity, and a challenge, to rebuild the institutional foundations of long-term competitiveness. This article examines the relationship between competition policy and industrial policy as two candidate policy instruments in the recovery process, through the lens of both contemporary economic research and Hungary’s recent experience. Looking at data for Hungary and thirteen European comparator countries between 2005 and 2022, we provide evidence of the erosion of competitive market allocation, with weakening links between firm productivity and market shares, accompanied by increasingly concentrated markets and a rise in market power. Together, these findings are consistent with a weakening of allocative efficiency, through the weaker relationship between productivity, market share, and pricing power coinciding with the expansion of politically mediated allocation mechanisms documented over the same period. Given this institutional starting point, we argue that, for increased competitiveness, a balanced approach is needed for competition and industrial policies, to restore market competition and improve the efficiency of resource allocation on one side, and using modern, Draghi-style industrial policy aimed at supporting long-run productivity growth on the other.