Hungary has enacted a ban that will take tobacco products out of grocery stores and gas stations and move them into “National Tobacco Shops,” and the move could end up costing them a significant amount of money, according to a recent article in the Budapest Beacon.
The move to get tobacco out of groceries and filling stations came about last year as part of an effort to restrict access to the products by minors. The government created over 6,000 concessions for new National Tobacco Shops, with the bulk going to supporters and friends of the country’s Fidesz political party, including a number of politicians and their families. The stores that would be able to sell tobacco products had to have screened windows to block visibility from the outside and be required to have uniform signage identifying them as a National Tobacco Shop. They were soon allowed to also sell convenience stores items such as soda, ice cream and newspapers and alcohol, with the possibility of being able to sell lottery tickets in the future.
Because of the ban, which affected some 40,000 retailers nationwide, the government could be on the hook for upwards of two billion forints, approximately USD 8.5 million, due to potential damages awarded.
According to the article, retail operators are required to pay an annual concession between approximately $450 and $1000, and in the event the contract is terminated or they lose their exclusive tobacco sales rights, they are entitled to seek liquidated damages equal to the total amount of annual concession fees payable for the balance of the 20 year concession. Damages are expected to be sought by upwards of 600 retailers.