09 May, 2013
Agency that will control the whole economy

Last week it was finally specified that the companies that, as compared with their rivals, enjoy preferences or make cartel agreement with one another, will be revealed not by opposed-to-them antimonopoly service, but by a competition agency.
Before the beginning of public discussion several details are made known. As soon as the bill enters into force, a legal entity of public law -a Competition Agency - chairman of which, with the Parliament’s consent,
will be appointed by Prime Minister for the term of 5 years will be set up. The Agency will be financed from the budget and will also have its own income.
According to the current law the Agency is authorized to react to those spheres that are considered by the government as having priority. But according to the amendments the Agency will independently determine such spheres. The company that, with its financial possibilities and considering the abilities of its rivals, holds 40% or more of the market will be deemed a monopolist. A businessman who infringes the law will be fined by not more than 10% of annual turnover. It also becomes known that the market dominants won’t be oppressed only because of their position and sanctions to fine will only be imposed in case of misuse of the privileged condition.
The bill imposes ban on anticompetitive agreements between the dominant companies. The attitude to cartel agreements will be especially strict. Information on any company will be collection on the basis of information that enter the Agency or on the initiative of the Agency. The Agency will submit the results to the court that will make final decision.
Ketevan Lapachi (one of the authors of the bill, PhD, expert of Georgian Development Research Institute): ‘According to the current law some branches were missing but the bill widens the scope. The law on competition won’t limit the branches. The new Agency is empowered to react only on complaints and what’s more in the established spheres and besides, the fee of consideration is to be paid. The bill doesn’t envisage any payment for a complaint, the Competition Agency is authorized and obliged to begin the study of the issue in case some signs of problem are outlined.
Q. – According to these changes will the import of oil products and pharmaceutical sector be included in the spheres of Agency’s interest?
A. – The aim of these changes is to give such a shape to legislation statutes that will enable creation of non-discriminating environment in case of their due implementation. In case there is such law and structure, the Agency will certainly be obliged and authorized to make oil products, pharmaceutical and other branches the object of its reaction. We understand that the business circles have certain expectations and fear as to how these obligations will be executed or used. I’d like to underline that the law envisages only inadmissibility and ban of misuse of dominating position’.
Paata Sheshelidze (expert of economic issues): ‘Monopoly can be created only by state privilege. Thus, if we need any legislation it must be directed against the state bureaucracy, limiting the spheres of its activity. Today we already have such legislation. Unfortunately, due to political situation of those times one branch of authorities could not change and control decisions of the other branch.
The bill is under consideration and something may be changed every day but the main essence of the changes is to add mechanisms to control the market players. The state retains other mechanisms to limit the market and interfere in the economy. In other words, a company should obtain only a certain share of the market. In case several companies are united their common share shouldn’t exceed the index limit. Such attitude is completely unjustified.
The main thing is that the current authorities are curiously fighting their own selves – on the one hand, they are discussing this bill but on the other – creating new monopolies. Monopolies on electric power, natural gas, water, public transport and traffic are retained. There is even more, creation of new ones is planned; an example of ‘Georgian Post’ can confirm this; it actually was made the monopolist of shipping operations but it didn’t work. An example of this is the monopoly of printing the school-books that is currently supervised by the state. An instance of monopoly is creation of united investment or agricultural fund. Everywhere they see a problem they create a monopoly and it makes me laugh when they are fighting against monopoly. Let them watch their actions. An absurd bill is being considered and I hope somebody from the authorities will say tomorrow or the day after that it’s nonsense…’
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