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Competition Agency Sees no Threat of Monopolies in Georgia

Competition Agency Sees No Threat of Monopolies in Georgia

Almost two months have passed since the  Competition Agency was  established. When will the development of legal acts be completed and when the Agency will begin to take real decisions?
The mere fact of the creation of the agency is not sufficient – it must have a legal basis on which it will work. We are now at the stage of its development, actively cooperating with local and foreign experts. Three normative acts have already been prepared, which will be considered in July.

In addition, we have established a group of experts and representatives of ministries, which will work on two and other documents that we’ll have to adopt. In general, the regulatory framework will be ready before October 1, 2014.

Many businessmen speak about the presence of monopolies in their sectors, for example in the grain milling business. Do you have specific plans for any of the sectors where you think there is a suspicion about the existence of monopolies?

A market research should determine the existence of   monopolies in any sector. Accordingly, the Agency has no right to accuse anyone of using monopoly without proper evidence. Moreover, any unchecked and reckless statement made by  Agency can do far more harm than good for the company and the country’s economy and image. The state must protect the interests of the business and promote investment, so we should refrain from impulsive and untested allegations.

We have certain approaches to the study of the state of the market, but to talk about them openly is early. In addition, it should be noted that the procedure of the study of the possible existence of monopolies is quite complicated, and it can take up to 10 months.

How will the Competition Agency act? On what basis inspections will be carried out – the agency itself will choose the companies and sectors, or research will be conducted on the basis of an appeal?

After relevant regulations are adopted, the Agency will begin to study the sectors that are of great public interest. The competence of the Agency also includes the study of complaints. The final decision will be submitted for consideration to the executive and legislative branches. We’ll also develop specific recommendations to prevent the creation of artificial barriers for some companies and illegal preferences for others.

 Are there any penalties, in which case the company will be considered a monopoly?

According to the competition law, the refusal to provide the information to the Agency shall be punished by a fine of 1 000 – 3 000 GEL. If it is proved that the company is abusing a dominant position on the market, the company will be fined in the amount of 5% of annual turnover – but this is only for the first time. If a monopoly position is proved for the second time, the penalty will increase to 10%.

Today many speak of a monopoly position in some sectors of the economy in Georgia, but the presence of monopolists in the market in its current state in the country is unlikely if the meaning of the word “monopoly” is properly understood. Of course, this does not apply to any specific markets, we are speaking about the whole situation.

Monopolies appear at moments when competition is artificially limited and state grants exclusive rights to individual players. At the same time monopolistic companies exist worldwide, and Georgia is not an exception, most importantly that the monopoly was not the result of artificial incentives.

 Do you plan to meet with businessmen?

Cooperation with the business sector is the main duty of the Competition Agency. In August, we are going to hold a meeting with businessmen and familiarize them with the draft regulations on which we are working now. Also, we want to hear their opinions on the future of the Competition Agency.