Anti-trust law under spotlight
23 June, 2011

A non-governmental watchdog of Young Financiers and Businessmen calls on Georgian government to fulfill the EU requirement on restoring of effective anti-trust body as soon as possible.  

Association of Young Financiers and Businessmen (AYFB) worry that delay in activation of comprehensive anti-trust body in Georgia in compliance with the EU requirements [which is obligatory for opening EU market door to Georgia within the framework of Deep and Comprehensive Free Trade Agreement (DCFTA)] draws Georgia away from strategic track leading to full EU family membership.

Young financiers think government makes an inexcusable mistake by postponing approval of the law that should insure restoration of anti-trust body [revoked in 2005 thanks to liberal economic reforms of Rose govenrmnet] into independent and effective structure. No DCFTA talks are supposed to start unless Georgia  fulfills all requirements [focused on harmonization of regulatory frameworks with the EU one] posed by the EU as preconditions for starting this talk  in four key areas including Technical Barriers to Trade (TBTs), Sanitary and Phytosanitary (SPS) Measures, Intellectual Property Rights (IPR), and Competition.

In the field of Competition Policy government had to restore anti-trust structure through giving independence to the Agency for Free Trade and Competition (AFTC) together with its full investigative powers, both in the area of antitrust and state aid. Government implemented only formal sides of the recommendation: the AFTC was transformed into an independent public law entity a year ago but its head is appointed by Prime Minister. But this legislative change does not enhance the administrative and financial independence of the Agency in fact. According to EU recommendations,   adoption and rapid enforcement of a general competition law based on antitrust regulation is crucial that is still delayed for uncertain period. The law was supposed to be approved in June of 2010, then in November, then in April of 2011… but as a matter of fact the draft project is not submitted to the parliament as yet.

Lack of effective anti-trust law encourages creation of latent monopolies  and clans connected with the authority grab all valuable businesses trusts, enjoy carte blanche and uncontrolled price-making that pumps national wealth to off-shore zones, young financiers said on June 71, 2011.

The recent price hike on foods specifically on meat largely debated at parliamentary sessions this week is an evident sample to trust activity. Under food security pre-text government empowered one slaughter-company to provide Tbilisi with meat that jacked prices up over-night. Merab Janiashvili, President of AYFB, believes the food-security remedies could not affect prices and the price-hike is caused by creation of a monopolist company at the market as well as meat importers far-going plans to supplant local meat by cheaper import.

“Georgian Lottery Company that enjoys an exclusive right on lottery game across the country for some reasons as well as recent tender held on Tbilisi inbound micro-bus lines and upcoming similar tender for Rustavi micro-bus line exemplify how the state encourages anti-trusts,” Janiahsvili said. “It may take us far to count monopolies as far as there is no trust-free field in the country where price-making is based on fair competition and not on cartel agreements and appetite of trusts.”

Young financiers hail Parliament to address implementation of EU requirements on anti-trust regulation till the process becomes irretrievable and blocks DCFTA for long time. Government resists this requirement that counters with the declared pro-EU course. Some non-governmental organizations incorporated in collation European for Georgia openly agitate anti-European course assuring that restoration of anti-trust service and closer ties with the EU may restrict economic freedom of Georgia. AYFB disagree. Numbers of developed countries that have strong anti-trust regulation are much ahead Georgia in economic freedom index, AYFB experts say.

“Some people believe anti-trust sets restrictions to private sector that is not correct approach. The role of anti-trust is to insure business from the state interference for the state is the power that makes certain entrepreneurs in privileged position that encourages market monopolization and inadequate price-making,” they say.

And indifferent policy of Georgian authority toward anti-trust law makes AYFB to think government lobbies latent monopolists.