Competition law reaches an end
27 March, 2014
Competition law reaches an end

The competition law of Georgia, which was suspended for over a year already since January 2013, is expected to be approved by the end of April. The antitrust body is put in a stand-by regime until then and will start operating at last. Thus, four months ahead of the signing of the associated membership agreement with the EU this August, Georgia will fulfill its obligation to the EU to have a competition law and a competition regulatory body.Whether or not this

competition law and regulatory body is another tick on Georgia’s list of obligations to the European community is still unclear because details of the bill amending the old antitrust law are not disclosed completely as of yet. The draft law is already completed, however, and slated for parliamentary discussions.


What is known is that, according to the draft, a Competition Agency will be set up as an independent body in which the government cannot interfere unlike the already existing Agency for Competition and State Procurement which was created early in 2012 by the previous government. The Agency will be mandated to research the competition climate of the country at its own discretion and will be accountable to the Prime Minister and to Parliament. The Prime Minister will assign the head of the Agency for a five-year term after Parliament approves the candidate.
That Georgia needs the competition law in order to make the heavily monopolized market free of monopolies is not a secret. For many years analysts have been pointing out problems concerning monopolies and cartel agreements in many sectors - such as pharmaceutical and fuel markets, communications, insurance, the banking sector - but to no avail.
According to Irakli Lekvinadze, an economic analyst majoring in competition law, there were two possibilities. Either there would be a competition law and declared political will to have a trusts-free market like in 1992-2004, before the Rose Revolution, which was never executed. Or there was the super-liberal approach of the Rose Revolution authorities, denying the needs for anti-trust law and leaving the market at its own discretion. The result in both cases was similar: a carte blanche for monopolists, high prices and a violation of consumer rights.
Based on the past experience of the country sector, pundits say the major point now is whether or not there will be a political will to execute the competition law rather than simply have an ineffective one like before.
The Rose Revolution power, which undertook a liberal economic course in 2005, revoked the antitrust law and the service accordingly. When Georgia started negotiating the conclusion of a free trade agreement with the EU in 2008, the government had to restore the antitrust regulation in 2012 because it was one of the four key preconditions to start negotiations on the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU. However, the forcefully accepted law was ineffective and ensured plenty of loopholes for monopolists.
As soon as the new authorities took office in the fall of 2012, the antitrust law was reformed and was expected to enter into effect in the spring of 2013. However, the issue was held up to this spring. According to the new draft law, a market player with more than 40% of market share is considered to be a monopolist. Lekvinadze believes this limit should be elaborated clearly to prevent harm to business. According to him, the law lacks a consultation and decision-making council, staffed by balanced personnel and representing both governmental and non-governmental sectors as well as scientists and business associations.
“However, no matter how well-elaborated and well-worded the competition law is or how effective its methodology will be, the major point is that the political will have to be focused on market competition and not on informal lobbying with state officials. The researches show that the market competition is deteriorating under incorrect political and economic decisions. Therefore the key function of the power should be the systemized neutralization of those decisions,” Lekvinadze said. 

 

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