Polygram takes action against Hungarians over failed tender

SJ BERWIN and US firm Shearman & Sterling are advising record label Polygram on possible action against the Hungarian government after the company was allegedly discriminated against in a privatisation bid.

Polygram claims it was shut out of the privatisation offer involving Hungary's state-owned record company in favour of a local company. Polygram lost out to the Hungarian company despite its offer being more than double that of the local company.

A decision on whether to sue or take alternative legal action could be made this week.

Richard Constant, London-based general counsel for the international Polygram Group, said: "We would like them to award us the bid.

"All we know is that we were discriminated against, and are looking at what our remedies might be."

Any action would be against the State Privatisation Agency, which handled the tender. An alternative route would be a complaint to the European Commission in relation to the association agreement between the commission and Hungary, said Constant.

The country is keen to join the EU. Stephen Kon, head of SJ Berwin's European Union competition department, said of Polygram's plight in Hungary: "I would say it's relatively unusual, but not exceptional. I think there is much work to be done in the Hungarian legal system to bring it to a satisfactory level, in order for the country to join the EU."

Shearman & Sterling's Hungary office is working closely with Constant and Polygram's Hungarian division, which the firm helped establish in 1992-93. Shearman & Sterling advised Polygram on the privatisation tender bid, and is advising on the validity of the means by which the company was disqualified from the bid, said Constant.