Government nationalizes tobacco product wholesaling

As of November 1 this year, only two companies will be allowed to sell tobacco products directly to Hungary’s national tobacco shops. Portfolio.hu says the new legislation practically squeezes out all other players and wholesalers from this market.

Tobacco companies excluded from the distribution monopoly have objected to the decision. Imperial Tobacco, JTI Hungary and Philip Morris said the move equals the nationalisation of tobacco wholesaling and claim that this concession will be harmful for taxpayers.

British American Tobacco (BAT) and Tabán Trafik Zrt. have been given a concession to directly supply national tobacco shops in the country. In essence, this closes the market for their rivals, the other tobacco wholesalers. portfolio.hu notes.

In light of this it is no surprise that those excluded from the monopoly condemned the decision in a joint statement. Imperial Tobacco, JTI Hungary and Philip Morris said by accepting a joint bid by BAT and Tabán Trafik for the central distribution of tobacco products the Hungarian government decided in an entirely non-transparent and discriminative way to pick two privileged market players.

They complain that "the nationalisation of tobacco product wholesaling is an unnecessary intervention into the current operating environment."