The state, which does not lift a finger against inaccurate scales in the market, the lack of cash registers and documents of origin of the goods, false and incomplete labels in stores, will now discipline large European companies.
After the boycott of retail chains on February 13 and in view of the next one, prepared for the 20th, the government of Rosen Zhelyazkov acted like any other that acts under pressure - it brought out the fire extinguishers, instead of the roots of the problem. The political response of the cabinet - an analysis and a draft law, is no different from the temporary committees of the parliament – These are ineffective measures created for media use.
The state enters the “food chain”
The state will bring justice to the agri-food chain by shortening the supply chain, limiting resellers and abolishing some commercial practices of large chains, such as delaying payments to producers by a month or more. The request is from the prime minister, who promised a bill ready within a month, and the NRA immediately begins an analysis of the activities of the retail chains - how many intermediaries there are, what markup each one charges, VAT and others. Thus, the state, which does not lift a finger against the old scales in the markets, the lack of cash registers and documents of origin of the goods, false and incomplete labels in a number of stores, will discipline large European companies.
Even if such a bill is prepared, it will have to comply with EU antitrust legislation, which places restrictions on direct state intervention in pricing and some measures may prove inapplicable. The idea of \u200b\u200b“direct access of the local producer to the end customer“ with the participation of municipalities sounds like a parallel state-regulated channel that may conflict with the principles of the free market and competition.
The explanation is that the association of producers will be encouraged to negotiate directly with the chains, following the example of other European countries. Collecting data on the markups of each participant in the chain and others related to “financial discipline“, may, however, create tension with traders and cause legal disputes.
The government does not envisage any special measures to stimulate Bulgarian vegetable production and farming in the long term. And no one is saying that without imports there is no way to feed the Bulgarian population. It is easy to check companies that are in the light. Let them try to check the path of the cherries that leave the gardens in Kyustendil, bought for 0.90 - 1 leva per kilogram and reach the capital's markets for 15-20 times higher prices. Due to low prices and the lack of pickers, last year the fruit growers in the region announced an initiative “Pick it yourself” and invited all those who want to pick the fruits on the spot.
Nothing more than honest people with character
Of course, state intervention cannot go without the Commission for the Protection of Competition (CPC), "in cooperation" with which the cabinet promised to establish unfair trade practices, hidden forms of concentration and vertical concerted practices (relationships between different levels in the supply chain such as suppliers, distributors and traders). All of this is now within the scope of the CPC's obligations, although its practice does not abound with sanctions for vertical restraints. This shows that they are either not investigated effectively, or proving them is difficult.
The Law on the Protection of Competition contains mechanisms for investigating hidden concentrations and vertical concerted practices, but the effectiveness of its implementation is in the hands of the members of the CPC. In other words, the independence and effectiveness of the CPC depend on the new seven that the parliament is about to elect, on their integrity and firmness in resisting party and corporate pressure. If the new chairman, deputy chairman and five members are ready to serve the public interest, evidence of informal agreements will be able to be gathered.
A report submitted by the PP-DB showed that while antitrust regulators in the EU have imposed fines worth hundreds of millions of euros in recent years, there are no food cartels sanctioned by the CPC in Bulgaria. There is only one fine in children's clothing for 1 million leva - for vertical restriction of competition (due to fixed prices for resale of products and setting minimum prices for resale to the end customer).
And European practice abounds with examples. An agreement between the chocolate and coffee manufacturer Mondelez and distributors to fix prices brought it a fine of 337.5 million euros imposed by the European Commission. In 2019, ten of the largest dairy companies in Spain were fined 80.6 million euros for agreements to undercut the purchase prices of raw milk from farmers. In Germany, in 2015, five large food retail chains were fined 151.6 million euros for fixing inflated sales prices.
Second attempt at boycott
The Bulgarian organizers of the boycott of retail chains have not learned a lesson from Croatia, where each subsequent attempt at boycott was weaker than the first. Now, however, the civic platform “Hello, Inspector”, the initiator of the protest actions, is calling for a boycott of banks and telecoms - and on February 20, it is calling for citizens to gather in front of the Croatian National Bank in Zagreb. The second boycott of retail chains in Bulgaria is scheduled for the same day, and on February 22, “Vazrazhdane” is gathering supporters in the square in front of the BNB under the slogan “Let’s protect the leva”.
The organizers of the first boycott assure that they are satisfied - the voice of the consumer has already been heard. They seem not to take into account that the anger against multinational companies is causing suffering to Bulgarian producers tied to them. According to data from 2019 (due to the lack of new research), over 67% of the assortment in the main food categories in the Billa, Kaufland, Lidl and T MARKET supermarkets consists of Bulgarian products. The share of large retail chains in the FMCG market, which reached 15 billion leva last year, is about 35%.
Finance Minister Temenuzhka Petkova reported a 28.8% drop in the turnover of large chains on the day of the boycott - on February 13, the drop was 7.9 million leva compared to the previous day, when 27.3 million leva were reported. However, institutions in other Balkan countries, where there was also a boycott, correctly presented the data comparing the turnover from the day of the protest with the same day the previous week. For Croatia, North Macedonia, Bosnia and Herzegovina, Montenegro, the results showed decreases of around 50 and slightly over 51%, but at the same time an increase in turnover in the days before and after the boycott.
In Bulgaria, such questions are not asked
By the end of February, the CPC will have a new composition, and future members will be checked only for affiliation with the former State Security. The commitments in the agreement between the four allies - GERB-SDF, BSP, ITN and DPS-DPS - for a methodology that would “upgrade” parliamentary practice in such elections with a “separate integrity check” were crossed out.
Do the candidates have offshore accounts, does the property status of the person and his family correspond to the income, to what extent is his career tied to parties and corporations? In Bulgaria, such questions will not be asked. The election does not even require 121 votes, but only half of the votes of those present - new majorities will be tested. Then a Commission for the Protection of Pseudo-Competition will be assembled.
And the citizens will be blamed for the food chains.
This comment expresses the personal opinion of the author and may not coincide with the positions of the Bulgarian editorial office and the State Gazette as a whole.