Raykov’s reassurances for Bulgaria’s retail chains

Written by on April 24, 2013 in Bulgaria, Business, News - No comments

Against a background of alleged cartel agreements, Competition Protection Commission queries on whether retail chains have resolved their issues with suppliers and government calls for retail chains to keep prices down as Bulgarians prepare to celebrate the Eastern Orthodox Easter, Prime Minister Marin Raykov has issued an assurance that his government will oppose any actions that have a negative impact on the market environment and free competition.

Raykov also issued an assurance that foreign investors would not face uncertainty, a statement made at a meeting on April 22 with representatives of major retail chains in the country, members of a retail association, attended by representatives of Billa, Kaufland, Carrefour, Lidl and Piccadilly.

The goal of the meeting was to find a way to establish lasting and constructive dialogue between producers and retailers, which would serve as the basis for solutions to existing problems between the two parties, a government media statement after the meeting said.

“I would welcome a gesture to build trust with the producers, and then together focus on finding solutions,” Raykov said.

Relations between Bulgarian producers and retail chains would be improved by organising trade shows and tastings for producers and retailers, as well as free consultations with experts from the state administration and the private sector. The first such exhibition will be held at the initiative of the Economy, Energy and Tourism Ministry on April 27 in Veliko Turnovo. The goal is to use such alternative measures to improve relations between Bulgarian producers and retail chains, the statement said.

“We do not distinguish between Bulgarian and foreign producers,” representatives of the association for modern retail emphasised during the meeting. According to them, there is no generic problem with producers, only specific issues between individual producers and individual retailers. They agreed that building the necessary dialogue must be accomplished using working groups that seek concrete results, rather than using the media.

“I have said before that I want freight trucks that bring goods into Bulgaria from abroad to leave the country not empty, but make the return trip full of Bulgarian goods,” Raykov said during the meeting. He suggested that retail chains develop policies targeting small and medium-sized producers, constantly developing their partnership further. According to Raykov, Bulgarian and foreign goods should be treated equally.

Last week, Prime Minister Marin Raykov also met with representatives of “Made in Bulgaria” association, discussing the situation of Bulgarian producers and their relationship with large retail chains operating in the country.

A few days ago, two members of the caretaker government headed by Raykov, Economy Minister Assen Vassilev and Agriculture Minister Ivan Stankov, issued an appeal to retailers to keep the prices of eggs and lamb – two foodstuffs traditionally consumed in Bulgaria at Easter – affordable in the approach to the Christian holiday.

The appeal is similar in principle to one made by the previous government ahead of Christmas, and before that in August, when the agriculture minister at the time, Miroslav Naidenov, persuaded a number of large retail chains to leave the prices of various foodstuffs, including bread, milk, yoghurt, cheese and eggs, unchanged for three months.

Cost-of-living is an especially sensitive issue in Bulgaria against the background of the winter protests that were the major factor in the resignation of the Borissov government.

In April, the “Made in Bulgaria” association criticised retail chains, alleging that the lack of an appropriate policy to set rules and stimulate local production was a major factor in increasing unemployment and reduced consumption in Bulgaria. The association accused foreign-owned retail chains of policies that favoured import goods and put undue pressure on Bulgarian producers. Plamen Grozdanov, president of the association, said that it was preparing a code of business conduct that would be proposed for adoption by the retail chains.

On April 17, the Association of Bakers said that in spite of the Competition Protection Commission’s recommendation that incentives should be put into contracts with Bulgarian producers to stimulate competitiveness, the contracts between large retailers and suppliers in Bulgaria had not changed.

In 2012, the commission recommended the scrapping of clauses in contracts that were resulting in incorrect pricing for suppliers. The previous year, the commission found that Metro, Billa, Kaufland, Hit, Maxima and Piccadilly were co-ordinating policies towards suppliers on pricing, discounts and rates for access to getting goods on shelves.

But in April 2013, Bulgarian media reports alleged that changes to contracts had not been made by major retail chains.

On April 9, the Competition Protection Commission requested updates from the six chains that had said that they would eliminate the problematic clauses in their contracts with suppliers, having said in 2011 that they would do so to avoid paying fines.

(Photo: Robert Michie/sxc.hu)

Comments

comments

About the Author

The Sofia Globe - Bulgaria’s fully independent English-language news and features website, run by an all-expatriate team. Sign up to subscribe to sofiaglobe.com's daily bulletin by using the form on the homepage of our website. Please click to support our advertisers!