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Reports: EC drops probe of Hungaryʼs tobacco distribution

History

After the Hungarian government promised to make some changes in the regulations, the EC will not initiate an unfair competition procedure against Hungary over the creation of a centralized tobacco supplier, state news agency MTI reported today, citing sources in Brussels. 

Confirming the decision, Cabinet Chief János Lázár said that, in the coming months, the government will recommend a number of clarifications in the legal regulations to ensure that no suspicion of prohibited state support will arise in future with regard to the supply of tobacco.

The European Commission’s Directorate-General for Competition was asked to look into the situation after a law passed in December 2014 meant that only one, state-approved operation could distribute tobacco in Hungary. The EC began an investigation last fall, after a consortium of Tabán Trafik and BAT won the concession to operate the central tobacco supplier for a reported bid of HUF 600 million. Competitors at the time said they would happily pay ten times that amount, but they were not given a chance to bid for the concession.

Lázár said today the EC informed the Hungarian government that, although the body had received a complaint relating to prohibited state support, Hungary’s arguments and proposals had proven convincing.

The cabinet chief said the government also expects a positive outcome to a related antitrust probe, the official conclusion of which is expected shortly. Lázár maintained that this success shows that with the right strategy and outstanding professional work, the Hungarian government is able to enforce its will even against opponents generally recognized as tough to deal with, such as the international tobacco lobby. He added that the government will continue its professional dialogue with tobacco market players to ensure the creation of long-term, sustainable regulatory policies, including those related to taxation of tobacco.

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