Monopolist companies in the pharmaceutical, wheat, kerosene, gas, coffee and other major markets may be imposed penalty sanctions in the near future.
As reported, for the first time in Georgia, the Competition Agency has exposed a cartel collusion of major oil products importers. The companies have to pay 55 million GEL fines. This decision signifies the government is seriously thinking of curbing the market monopolist companies. The competition agency is expected to make order in the pharmaceutical and wheat markets too.onopolist companies in the pharmaceutical, wheat, kerosene, gas, coffee and other major markets may be imposed penalty sanctions in the near future.
Besides the oil products market, the competition agency is also examining several other sectors, namely, kerosene market, alleged cartel collusion between members of the wheat and pastry products association of GlobalAgro and the Black Sea Port oil terminal.
On the ground of appeals the competition agency is exploring illegal activities in the gas, grains and wheat commodity markets. The agency is also examining an appeal of LLC Litex-Service accusing TbilService Group of having infringed the law on competition.
The agency is also investigating alleged infringement of the competition law’s 10th entry on state procurement, namely, a violation of regualtions for purchase of special equipment by local self-governments (Khashuri, Aspindza, Abasha and Terjola municipalities). The suitable appeal was submitted by LLC Inter Technics. The agency is also examining the appeal by LLC Georgian Trans Expedition accusing TransCaucasus Terminals Ltd, a subsidiary of Georgian Railway, of a misuse of dominant positions on the market.
Moreover, the competition agency is examining an appeal by the Evex medical corporation against the Ingorokva Clinic that has allegedly bought a 50% of shares. The agency is also monitoring the coffee commodity market.
Specialists point to several other directions, including, the communication sector, especially, internet providers and, naturally, the pharmaceutical sector.
The wheat and grains market monitoring will end in the near future, namely, in October. The deadline was rescheduled from July to October. On July 17 the association of grain growers received a notification that the exploration works would last to October 12.
The competition agency started the wheat market examination about 6 months ago. Namely, Georgian grain growers were complaining against Azerbaijani company Karat Holding for infringing the state legislation. The appeal submitted to the agency reads in 2013-2014 the company was operating with unfair prices and misusing dominant positions on the market.
The legislation calls for submitting the research in 3 months. At the same time, the agency is entitled to prolong the exploration period for additional one year because, Levan Silagava, a head of the association of grain growers, said.
At the same time, after the competition agency started the wheat market examination, Azerbaijani company Karat Holding became law-abiding, Silagava added. The situation has settled. New companies have opened, including GeoMill company in Lilo. Moreover, contrary to previous years, grains are imported from Russia, not from Kazakhstan and the market has been redistributed, he added.
“Karat Holding company possesses elevators in eastern Georgia, while the Russian grains are delivered to the Poti Seaport. This factor has also balanced the situation. Previously, the Azerbaijani company used to control 70% of the market, today the ratio has halved to 35%”, Levan Silagava noted.
Healthy competition tendencies are strengthening on the market. Despite the recovery, the Azerbaijani company may be called to account anyway in line with the legislation, he added.
Thanks to the competition efforts, the government will introduce regulations to ensure free competition in the country, economic expert Levan Kalandadze noted.
Previously, the agency used to publish reports on small-sized business activities, but oil importers, pharmaceutical and wheat markets were closed for similar research works, Kalandadze noted.
“The Authorities seemed to be lobbying deliberately these sectors, but the oil products market monitoring has ultimately dismissed similar doubts. The most important and necessary thing is to fully complete this research and execute specific problematic cases at the level of legal mechanisms.
The precedent will become an exemplar for other fields and the competition agency will not enable someone to misuse the dominant positions on the market. Naturally, the oil products market research reports will dissolve cartel collusion and oil products prices will be regulated on the domestic market.
At the same time, in theory, the western experience shows the process may be developed in the opposite direction and the business sector may artificially increase prices in protest.
This issue will not be confined with exploring only one case. We will permanently monitor and control all sectors and directions”, Kalandadze said.
The expert has also overviewed the future plans of the competition agency. Since now, the agency will also examine the pharmaceutical and wheat markets.
“There are certain demands, orders and expectations in the Georgian society. There are many problematic cases in Georgia and oil products, pharmaceutical and wheat markets are the most problematic directions”, Kalandadze noted.