Dufry issues Prime Ministerial challenge to Kyiv duty free tender
Dufry issues Prime Ministerial challenge to Kyiv duty free tender
Published: 18/06/14
Source: ©The Moodie Report
By Martin Moodie
UKRAINE. Dufry has challenged its exclusion from the recent duty free tender at Kyiv Boryspil Airport in a legal action addressed to new Prime Minister Arseniy Yatsenyuk. It has also called for the result to be cancelled and a new tender held.
The retailer declined to comment when contacted by The Moodie Report
As revealed, the airport operator last week awarded two duty free and travel retail concessions at its new international terminal. One was to the Gebr Heinemann-controlled venture BF GH Travel Retail and the second to Kyivrianta (under new ownership since Aer Rianta International sold the business last year).
BF GH Travel Retail will sell core duty free categories and some fashion accessories from a 2,200sq m area at Terminal D. Kyivrianta will operate 700sq m of fashion retail space. The new concessions are expected to run for 10 years each.
The move marks a return to the pure retail concession model for the airport, which last October took over all retail outlets and appointed BF GH Travel Retail as its exclusive retail management partner across the airport.
But in a strongly worded legal challenge to Prime Minister Yatsenyuk dated 6 June (shortly before the award), Dufry challenged key elements of the tender document, most notably the requirement that any bidder had to have operated duty free shops of no less than 700sq m in a Ukranian airport for at least three years.
Dufry also took issue with the related requirement that bidders should provide financial statements showing duty free turnover in at least one of the country’s airports of at least UAH650 million (US$55 million at current exchange rates – the Ukrainian Hryvnia has slumped dramatically in recent weeks against international currencies due to the political unrest in the country).
Dufry’s legal counsel said that such conditions gave existing duty free players in Ukraine a “privileged position in relation to competitors, which leads to restriction of competition without objective grounds”.
The challenge continued: “Additionally, de facto it is impossible for the Applicant to gain an experience of operation in Ukranian airports since, to the best of our knowledge, the tenders which may provide an opportunity for the Applicant to conduct relevant operations were not held earlier. Consequently, currently the Applicant de facto is not able to start business operations on the Ukranian market in the area of operation of duty free stores.”
The challenge points out that Ukraine intends in the near future to sign up to the EU Common Aviation Area Agreement and to comply with all EU standards regarding fair competition. It says that the tender conditions “evidence violation of principal European business standards”.
It concludes: “The Dufry worldwide experience in 61 countries shows that this tender is not in line with European standards and creates a negative impression in European business society for Ukraine.”
Dufry counsel requested that the Prime Minister suspend or cancel the tender as currently structured. If that is not possible [and given that the award has now been made, that appears likely –Ed], Dufry has requested that the Prime Minister order the regional department of State Property Fund of Ukraine in the Kyiv region to cancel the tender awards and to conduct a new tender without “restriction of competition”.