Hungary confirms distribution contract award

Hungary’s National Development Ministry confirmed on Thursday (June 25) that it had awarded to British American Tobacco and Taban Trafik a concession for the distribution of tobacco products to licensed retailers, according to a Portfolio.hu story.

This was despite its having received a more favorable bid from three other tobacco companies on June 24.

A joint bid submitted by Imperial Tobacco Hungary, JTI Hungary and Philip Morris Hungary had offered to pay HUF89.1 billion over 20 years for the exclusive right to supply national tobacco shops, 900 percent more than the HUF8.9 billion bid submitted by BAT and Taban Trafik.

In an announcement, the ministry said it had no choice but to reject the new bid by Imperial, JTI and PM because it did not conform to legal requirements and because the state had already signed a contract with BAT and Taban.

The announcement said also that the new offer was not legally binding; that it set a maximum amount for the concession fee despite the fact that this was to be determined by the budget act from the fifth year on; that the bid contained no business plan or detailed calculations; that the ministry had no way of verifying whether the bidders could be considered transparent organizations; and that Imperial proposed to outsource the distribution activity to a foreign company.