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Tobacco firms disappointed by ministryʼs rapid rejection

Imperial Tobacco Magyarország Kft., JTI Hungary Zrt. and Philip Morris Magyarország Kft. are “disappointed” by the Ministry of National Development’s rejection of their unsolicited tender application for the concession of a centralized tobacco distribution system, a press release revealed today.

The three companies said in a joint statement that they trust the ministry will reconsider their application, and do not understand how the ministry was able to reject their application in 24 hours. The statement notes that they disagree with the ministry’s reasons for rejecting the tender on the basis of it “not complying with legal requirements.”

"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 press release noted. 

"The companies are still open to substantive negotiations in order to set up a sustainable and viable market model in the long run presuming there is still a chance to cooperate with the Ministry of National Development. This would bring benefits to the Hungarian State and ultimately to Hungarian taxpayers, our employees and the retailers alike," it added.

Imperial Tobacco Magyarország Kft., JTI Hungary Zrt. and Philip Morris Magyarország Kft. said in a press release last Wednesday 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.

The concession was reported earlier 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. BAT and Tabán are expected to pay HUF 600 mln to the state for the concession.

The bill approved by Hungarian Parliament mid-December on the establishment of a centralized distribution company for tobacco products is likely to cause the dismissal of 1,200 Hungarians who work in the business, Lajos Csizmadia, the spokesperson of the tobacco workers union (DDTSZ) told the Budapest Business Journal earlier.