Philip Morris, Imperial Tobacco products stay on shelves

Food

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Despite reports a week ago suggesting the tobacco products of retailers Philip Morris and Imperial Tobacco could vanish from store shelves as the two companyʼs did not agree with Hungary’s centralized tobacco distributor, the National Tobacco Supply Company (ODBE) said yesterday and today that is was finally able to sign contracts with the two companies, Hungarian news agency MTI reported.

Retailers may place orders for Philip Morrisʼ products from December 7 and for Imperial Tobacco products from December 4, MTI reported.

ODBE has signed contracts with Alföld-Tabak, BAT Pécsi Dohánygyar, Continental Dohányipari, Danczek Dohányipari, Imperial Tobacco Magyarország, JTI Hungary, Philip Morris Magyarország, Róna Dohányfeldolgozó, Tabán Trafik and TTI Hungary, MTI reported.

After a bill was 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. said previously that the concession was not awarded fairly. In a press release published in mid-June they announced they would jointly offer 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 were to disappear from store shelves temporarily, as Philip Morris and Imperial Tobacco hoped that the European Commission would declare Hungaryʼs centralized tobacco distribution system unlawful, thereby canceling 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 comply 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 for 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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