Monopolies Linger in Georgia
02 May, 2013
Monopolies Linger in Georgia
Georgian market has been and remains heavily monopolized, which hinders the development of smaller business and entire economy. If ex-power boosted creation of monopolies in private business, the incumbent authority encourages the state monopolies both plighting business climate of the country, Georgian economic analysts worry. Although one of the key pre-election promises of Georgian Dream Coalition, the ruling power of Georgia that shifted the ex-ruling National Movements just around 6 months ago, was to discharge Georgian market
off monopolies through creation of a proper anti-trust service and competition legislation the problem aggravated rather than diminished lately.
New authorities really addressed to streamline competition legislation with the EU one and the draft package of amendments is already put under parliamentary procedures and expected to be approved by end of this spring session. But while the legislation-making process is on, the operating old monopolist companies go ahead with their activity and new ones are coming on the way under the state umbrella this time. According to Paata Sheshelidze, President of New Economic School, instead of scrutinizing and removing the reasons encouraging monopolies new powers try to settle situation through creation of state monopolist companies in the problematic sectors particularly in insurance, agriculture, publishing business, and cargo transportation.
As a matter of fact, there were allegedly monopolist prices on text-books and the state decided to solve the problem now by creation of the state publishing company that will be providing all schools by books; insurance business enjoyed the profits out of the state-funded health-insurance packages during the previous authorities, the incumbent one set up the state overall health-insurance fund thus depriving the private companies to develop health-insurance product as such; under excuse of anti-smuggling remedy ministry of finances made substantial changes to the procedures on importing/exporting goods to and from the customs territory of Georgia, as well as submitting declarations that has created serious problems to Georgian private carrier companies and lit a green light to the state-owned Georgian Post for it turned out to be the only carrier responding to the new requirements.
“All these new state companies are de-facto monopolists in fact,” Sheshelidze elaborates. “There have been permanent claims that monopolists operated at Georgian market during the previous authorities particularly pointing on fuel and pharmaceutical business. The power changed and what is the result? Zero. Old monopolists still remain and new ones are set up,” Sheshelidze said in the interview to Georgian Journal.
Soso Archvadze, an economic analyst, worries that monopolies hamper to smaller business development that are muscles of any developed economy globe over. The only way-out from the situation is high public control and permanent care to make the competition legislation as perfect as possible.
“The risk of monopolist activity has always been and will remain and the only way to resist the problem is permanent improvements of the legislation so as to prevent monopolist activity. And high public interest is crucial to this end lest the state turned a blind eye to the problem,” Archvadze said.
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