Philip Morris, Imperial Tobacco products likely to vanish

Food

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The tobacco products of retailers Philip Morris and Imperial Tobacco are expected to disappear from shelves soon as the two companyʼs did not agree with Hungary’s centralized tobacco distributor, which begins operations today, Hungarian online daily index.hu reported.

After a bill approved by Hungarian Parliament mid-December on the establishment of a centralized distribution company for tobacco products, the concession was reported to have been awarded to British American Tobacco (BAT) and Hungary’s Tabán Trafik. The two companies will act together as middlemen between manufacturers and retailers for the next few years. 

Imperial Tobacco Magyarország Kft., JTI Hungary Zrt. and Philip Morris Magyarország Kft. have said the concession was not awarded fairly. They said in a press release in mid-June that they were jointly offering a concession of HUF 6 bln to operate a competition-free tobacco product distribution system that would create 500 jobs, while BAT and Tabán are expected to pay HUF 600 mln to the state for the concession.

According to index.hu, the products are expected to disappear from store shelves temporarily, as Philip Morris and Imperial Tobacco are hoping that the European Commission will declare Hungaryʼs centralized tobacco distribution system unlawful, thereby cancelling the new system, and restoring the old one.

However, the Ministry of National Development rejected their unsolicited tender application for the concession of a centralized tobacco distribution system, saying the tender did “not complying with legal requirements”, according to the ministry. “The bid is based on proper calculations, it is deliberate and economically substantial. We still stand by this offer expecting that the Ministry reconsiders it”, the three companies said, adding that they were open to negotiations.

Lajos Csizmadia, the spokesperson of the tobacco workers union (DDTSZ) told the Budapest Business Journal earlier that the new system is likely to cause the dismissal of 1,200 Hungarians who work in the industry.

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