Firms Often Disrespect Competition Rules to Make Profits

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In times of crisis businesses start using all permitted and not quite permitted means, tricks and gimmicks to attract customers and increase profits. While Finance Minister Simeon Dyankov would limit the ability of firms to avoid taxes, by linking their cash registers with NRA, to distort the competition remains rather easy. The proof for this statement is the antimonopoly committee’s report for last year, which at length describes all transgressions carried out by merchants.

The greatest interest attract prohibited agreements, decisions and concerted practices and abuse of monopoly or dominant position. In recently years people become fed up with all sorts of agreements between manufacturers, distributors and retailers whose sole purpose is to cash in on people’s money. Telecom companies, heating companies and others are twisting the arms of their customers with impossibly high bills, since there is no competition on the market. All this leads to the absurd situation where Bulgarians, whose incomes are among the lowest in the European Union, to pay for most goods and services equal or even higher prices than their Western partners. Throughout 2011 the Commission for Protection of Competition initiated only 26 proceedings for such offenses, although this is more than in any of the previous five years. In most cases the control body never found violations. In practice, the structure headed by Petko Nikolov can boast only four definitions where it found the complaints were justifiable.

Perhaps the most significant act of the Commission in this area was the end of July 2011, where, after a sectoral analysis of the fuel market a proceeding for infringement by Lukoil Bulgaria, Rompetrol Bulgaria, Naftex oil and OMV Bulgaria was initiated. As a result of the studies in March this year, experts brought allegations of possible cartel agreement against the four distributors of gasoline and diesel. The offense consists of a prohibited agreement or practices of concerted prices, which by their nature prevent, restrict or distort competition in the markets for wholesale gasoline and diesel fuel. Within 30 days the accused companies had access to the files and could submit written objections and be heard in an open session. Petko Nikolov recently announced that the companies submitted objections and suggestions for correcting the problems. However, the outcome of the saga is still unclear and fuel distributors may get away with nothing and thus continue to determine prices the way they wish.

Otherwise, the statutory penalties for proven or prohibited cartel agreements are 10% of the turnover of the company for the financial year. Specifically for Lukoil Bulgaria, this means about 300 million levs in fines. In most cases, the amounts may be appealed and the court reduces them at times.

As to the proceedings against major retail chains, there things ended before having started at all. The examination was initiated upon a signal from the Confederation of Employers and Industrialists, which placed the problem of unequal treatment of Bulgarian producers with regard to access of their products to Metro Cash and Carry Bulgaria, Billa, Kaufland, Piccadilly, Carrefour, Maxima Bulgaria and Hit stores. The anti-monopoly bodies, however, found no such inequalities.


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