Austrian Tobacco Monopoly Administration on the Test Bench – Public Concessions Procurement Act (BVergGKonz 2018) Applicable!

Our office has achieved another groundbreaking victory for the rule of law in Austria: With its decision dated 20 July 2021, Ra 2019/04/0231, the Austrian Supreme Administrative Court has ruled that the award of contracts for tobacco shops and tobacconists falls within the scope of the Federal Law on Public Procurement for Concessions.

The award of contracts for tobacco shops in Austria has regularly been administered by the Monopoly Administration ltd, a state-hold body. In the past, the practice of this body has been intransparent. Austrian media also covered and criticized the administrative decisions of this body.
Highly-frequented tobacco shops on public places generate seven-digit turnovers in the sale of cigarettes and tobacco alone. Additionally, the operation of a tobacco store allows for lucrative side-businesses like sales of lottery tickets etc. Presently, all tobacconists are awarded life-long. Consequently, traceability and transparency in the award of tobacco shops is crucial.

In the past, the Austrian Court of Auditors („Rechnungshof“) has strongly criticized the system of procurement in this indsutry. Neither the legislator nor the administration responded to this criticism. The Monopolyl Administration based their decision on the Austrian Tobacco Monopoly Code, an act of law dating back to the times after World War II. In this time, the system aimed at providing for war invalids, granting them privileges in award procedures. In recent years, this system has become obsolete. However, the legislator failed to respond to the factual changes.

In order to challenge the obvious inconsistencies with the award of specific tobacco licenses, our office has initiated the first proceedings based on the Federal Procurement Act on Public Concessions in Austria at all. In the proceedings, we pleaded the applicability on the EU Public Concessions Directive 2014/23/EU.
The Federal Administrative Court has quashed several actions, arguing the the operation of a tobacco shops was no public concession, but „a specific legal institute, carrying no public service obligations for the operator“.

The Supreme Administrative Court has no put this right: Indeed, tobacconists‘ commercial activities are regulated by manyfold obligations and restrictions in the public interest, e.g. for the distribution and supply of the population with tobacco products. Therefore, the Monopoly Administration is obliged to comply with the Federal Procurement Act on Public Concessions. The legal remedies and procedural regulations of this Act apply in the award of tobacconist’s licenses.

We are happy for this groundbreaking success in the field of procurement law, especially on the procurement for public service concessions.
If you participate in tenders for public concessions, we will gladly guide and advise you and eventually enforce your claims at the competent courts!

Our success was reported by the Austrian daily newspaper “Die Presse”, ORF (The Austrian Broadcasting Corporation) and others.