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Hungary Considering Introduction Of Australian-Style Uniform Packaging For Tobacco Products

Hungary is considering the introduction of uniform packaging for tobacco products, which would mean that all such goods would have identical packaging and advertising tobacco products would be prohibited. This system is already in place in Australia and authorities in France and Ireland are also planning its introduction. A proposal on the matter is expected to be tabled by Parliament in autumn.

According to plans, the construction of Budapest’s new hospital would be financed by a special tax levied upon tobacco companies.

In Australia, a law has been in place since December 2012 which obliges retailers to sell tobacco products in identical packaging, which is prohibited to carry insignia, colours or design elements which set a given brand apart other products on the tobacco market. The law was set in place with the explanation that some 15 000 people died each year in Australia alone from illnesses connected to smoking, costing the state a total of 31.5 billion dollars.

Three tobacco firms threaten legal action over Hungary sales reforms

Three tobacco companies have threatened legal action against Hungary’s government unless it revises what they say is a “discriminatory” decision to award a 20-year retail tobacco supplier contract to two rival companies.

Earlier this month British American Tobacco and Taban Trafik were awarded a concession to supply retail tobacco shops from November for an initial annual fee of 10 million forints ($36,500) this year, rising to 600 million by 2021.

The two companies will act as intermediaries between manufacturers and retailers, supplying all tobacco shops in the central European country of 10 million people in the next years.

Rival firms Imperial Tobacco, JTI Hungary and Philip Morris say the selection process for the winners was “untransparent and discriminatory” and the step amounts to a nationalisation of the tobacco wholesale business.

“We firmly believe that this latest step is also in breach of Hungary’s fundamental obligations stemming from its European Union membership,” the three companies said in a statement.

Prime Minister Viktor Orban’s government, which has clashed with the European Commission on reforms affecting the media, the judiciary and the central bank over the past years, said the changes would create a neutral and non-discriminatory system.

By lifting applicable margins for smaller tobacco shops, the government says it will boost income for small players at the expense of the profits of multinational companies.

The tobacco firms criticising the reforms say the new system “clearly and openly discriminates against foreign-owned firms and was against Europe-based firms that do not manufacture their products in Hungary.”

They say the Hungarian government was providing unlawful state support to BAT and Taban Trafik and giving them a permanent, unfair competitive advantage.

In particular, Imperial Tobacco, JTI Hungary and Philip Morris have taken issue with their rivals gaining access to sensitive information such as pricing formulas, stock sizes and new market activities.

“This situation is unacceptable for us,” the firms said, calling on the government to launch a new tender involving all local tobacco companies or face a legal challenge. ($1 = 274.12 forints) (Reporting by Gergely Szakacs, editing by David Evans)