Hungary’s move to drastically restrict the number of outlets selling tobacco caused an uproar, with critics saying the government has restricted access to information about the way tobacco licenses were distributed. Hungary has made tobacco retailing a state monopoly and granted 20-year concessions to run tobacco shops for a flat fee to individuals selected mostly on the basis of the applicants’ business plan. Exact criteria for judging the business plans haven’t been made public. Critics of the Fidesz-led government’s measure claim the move has reshaped the market in a way that helps the government, which is facing parliamentary elections next year, by favoring Fidesz-friendly individuals and companies. Several of the critics, including some of the opposition parties, have challenged the measure in court.
But criticism also came from within the ruling party. Akos Hadhazy, a Fidesz-party representative in a countryside local council, said the license tender was biased and that the Fidesz representatives of the municipality of south Hungary’s town of Szekszard were told to choose Fidesz party-affiliated winners from among the bidders. Fidesz communication on policy steps has so far been firmly unified. “The Fidesz faction members were present at the meeting and the mayor, also the head of the constituency, said: ‘Here is the list of the applicants’. He asked us to check out who we knew [on this list] and who could be an appropriate applicant. I was surprised. I knew there are lobbies but that this can happen so openly I was surprised to see,” the local Fidesz representative was quoted as saying in an interview by the online version of business weekly hvg.hu.
Mr. Hadhazy wasn’t immediately available to comment. The town’s mayor, Istvan Horvath, said to the same publication that Mr. Hadhazy was lying. The tender, whose winners have been made known in recent days, will put Hungarian-owned small firms and entrepreneurs into a position of being able to make a living from tobacco sales, while tighter control of the market will reduce smoking, the government said. The measure will reduce tobacco sales points to only around 7,000 from the current 40,000. Because tobacco sales were separated as a business from the retailing of other goods and services, the government will also need to raise the price of tobacco to ensure the business remains profitable. The price of a packet of cigarettes will increase by about one third, after Prime Minister Viktor Orban said he’d like to raise the retail margin on tobacco to 12% from the current level of around 4%. Tobacco sales have so far been generating profits for supermarkets, many of which are foreign-owned, grocery stores, and filling stations, most of which are owned by Hungarian oil and gas company MOL MOL.BU +0.09% Nyrt.
The government isn’t planning to annul the tender because it was organized fully in line with the law, Janos Lazar, head of the Prime Minister’s office, said at a press conference Monday. The government is ready to fight the issue in court, he added. Those left in the losing field have formed an association and demanded from the government the publication of the list of all applicants, the names of those on the evaluation panels, and the minutes and notes on the bidding process. The government has said the data related to the tender are not public. Fidesz party’s two parliamentary representatives Monday submitted an amendment to the Information Act, which the Fidesz-dominated parliament approved Tuesday, to restrict “the abusive…demand of information…which could hinder the operation of the data provider greatly and for a prolonged period.” The amendment to the act says state audit offices ensure appropriate oversight over public service entities.
Fidesz MPs in parliament on Tuesday said the two moves–the tender and the modification to the Information Act–were unrelated. But in reaction to the parliament’s approval of the amendment, several civil groups such as K-Monitor, atlatszo.hu, the Civil Liberties Union and Transparency International have announced that they will quit the Anti-Corruption Working Group they had formed together with the government to fight corruption.
Source: http://blogs.wsj.com/emergingeurope/2013/05/02/hungary-tobacco-market-reshuffle-roils-public/
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