Monopolies in Armenia
Government Committed To Antitrust Measures, Insists Minister
The government is serious about its pledges to de-monopolize lucrative imports of essential goods and commodities to Armenia, Economy Minister Artsvik Minasian insisted on Thursday.
Prime Minister Hovik Abrahamian has vowed to put in place “equal conditions” for all importers as part of sweeping reforms announced by him earlier this month. He said that the Armenian government will step up its fight against corruption and radically improve the domestic business environment in view of new security challenges facing the country.
Abrahamian told the Ministry of Economy and state anti-trust regulators to “analyze” within the next three weeks the impact of de facto monopolies on economic competition in the country. Companies owned by government-linked businesspeople have long controlled imports of fuel and basic foodstuffs, something which economists regard as a major hurdle to faster economic growth.
Minasian said that his ministry will release soon a detailed report on the monopolies. As part of the same effort, it has drawn up “explanatory” booklets for businessmen interested in importing about a dozen items, including fuel, wheat and sugar. Minasian unveiled them at a weekly cabinet meeting in Yerevan.
Minasian, who was appointed as minister in March following a power-sharing deal struck by his Armenian Revolutionary Federation party with President Serzh Sarkisian, dismissed lingering media and opposition skepticism about the government’s stated reform drive.
“Instead of joining forces to put that policy into practice, as soon as something good is done we criticize and complain about why it hasn’t been done before,” Minasian told journalists. “I not only believe [in the seriousness of the reform promise] but am also fighting for that.”
Critics argue that that many senior government officials have personally benefitted from business “oligopolies” and heavily relied on them for political support.
STATE BODY URGES SEVERAL COMPANIES TO RESPECT COMPETITION RULES
By Ruzanna Stepanian
A state anti-trust body has found that several companies are holding de facto monopolies in Armenia’s sugar, petrol, diesel, brandy and detergent market and warned them not to abuse their advantage or face penalties.
The State Commission on Protection of Economic Competition (SCPEC) revealed its studies on Wednesday showing that in particular two leading petrol importers, Flash and CPS, share more than 80 percent of the market between themselves, respectively having supplied 41.4 and 40.4 percent of the whole amount of petrol imported to the republic in the first half of 2006. Seven companies, including the two above-mentioned ones, were engaged in petrol import to Armenia in the first six months of the year.
Deputy Director of the Flash trading company Mushegh Elchian admits that their company may have a leading position on the petrol market, but says it is solely due to their greater financial and institutional possibilities.
“Fuel trade requires large financial and capital investments and smaller companies will always find themselves in a worse situation than larger importers,” Elchian said. “Besides importing fuel, one also needs to have storage capacities.”
Flash’s representative boasted of his company’s ability to store up to 12,000 tons of fuel at a time, which he said is unmatched in the republic.
Elchian denied any existing limits for the amount of petrol imports decided among the sphere’s companies.
According to economic agents, the appreciation of the dram has impacted gasoline and diesel fuel prices. In particular, they say it precluded a hike in fuel prices. Flash’s deputy director announced that gasoline prices will go down by 10 drams (2.6 cents) in the republic beginning next week.
Gasoline is imported to Armenia mainly from Europe. Specialists say Russia has no oil refineries that would produce gasoline meeting European standards.
Elsewhere, the SCPEC found the Salex Group Company as holding a monopolistic position in Armenia’s sugar market. By sugar sales this company has seized 91.4 percent of the market this year and comes to replace last year’s monopolist Fleetfood that held 99.4 percent of the market by its sales in 2005 but dramatically reduced its sales to only 7 percent this year.
There are speculations that both companies belong to MP Samvel Aleksanian, who is known to hold a monopoly on sugar imports to Armenia. The lawmaker could not be reached for comment.
The Commission also reviewed the brandy market and found the Yerevan Brandy Company to be a monopolist in this field. This company by far outdoes competitors in terms of both production and export volumes.
Wednesday 8, November 2006