Bulgaria’s competition watchdog sees food prices as unjustifiably high, suspects cartel

The “significant” rise in wholesale and retail food prices in Bulgaria in not justified by prices charged by producers and others in the distribution chain, the Consumer Protection Commission (CPC) said on March 21.

The CPC said in a media statement that it had reached this conclusion after completing an economic analysis of the market situation.

It said that it had a “reasonable suspicion” of illegal practices by the main market participants, “undoubtedly” including large retail chains.

“The likelihood that the market phenomena under consideration are due to collusion and agreements restricting competition both horizontally and vertically cannot be ruled out,” the CPC said.

The CPC said that it had conducted surprise inspections at the offices of retail chains, manufacturers and their associations in connection with the increase in the prices of basic foodstuffs.

Commission officials, accompanied by police and after receiving permission from the Sofia Administrative Court, confiscated paper and digital documents and electronic correspondence from the companies’ offices, the statement said.

It said that detailed analysis of these should show whether there was sufficient evidence to allege irregularities.

The CPC said that price fixing was defined in the law as a serious violation.

It said that the law allowed it to exempt from a fine the first enterprise that discloses its participation in a cartel and provides evidence on the basis of which the commission can prove the violation.

A second and subsequent enterprises may have their property penalty reduced if they provide evidence that is essential to prove the violation, the CPC said.

On March 20, the CPC said that in 755 inspections in commercial food chains, it had found 651 violations, 254 of which involved unfair trade practices.

On March 13, caretaker Economy Minister Nikola Stoyanov said in a television interview that the state was prepared to introduce, as of the beginning of April, a ban on retailers marking up prices of basic foods by more than 10 per cent.

According to Stoyanov, most goods were overpriced by 20 per cent. He did not disclose the methodology on which this allegation was based.

“Since we notice that the prices of food products are not falling, despite the efforts so far, we have decided that more decisive measures are needed,” Stoyanov said.

The Association of Modern Traders, which represents the major supermarket chains in Bulgaria, said at the time that it had not been officially informed that the caretaker government intended putting a 10 per cent cap on markups on the prices of basic foods.

The association said that it would be interested to hear what the European Commission would have to say on the matter.

Association head Nikolai Vulkanov told Bulgarian National Television on March 16 that such a cap was not normal in a market economy, and before such a decision was taken, there should be careful consideration whether it really would bring down inflation, or would cause bigger problems.

(Photo: Bartosz Wacawski/freeimages.com)

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