It seemed as though we had decided the answer to this question and even passed it as a law in the existing constitution. According to the 8th article: “The state guarantees all forms of free development of proprietorship, equal copyright, freedom for economic activities and free competition.” How the government guarantees all of this or if it even does guarantee it is a different story. The main thing is that free competition is one of the key factors for economic development.
However, it turns out that it is not like that. As ARF representative Armen Rustamyan stated in his speech during the seminar entitled “Monopolies in Armenia-problems and solutions”: “Free competition is not such a good thing…There is the concept of “natural monopoly” which is defined in the constitution.”
This is not news to anyone. The “natural monopoly” concept has been around for a while. When it is suitable from an economic point of view in order to have one supplier in the given field, that monopoly is called “natural monopoly”. For example, we can name some monopolies such as telecommunications, water supply, electricity and other fields where the second supplier in the market is not only absurd, but can also have negative effects.
But why did they remember this now? The thing is that this is included in the constitutional amendments and any change must be looked at as a step towards development. That part in the constitution (33.1) says: “Limits of competition, the possible types of monopoly and their standards can only be constituted by law if it is necessary to protect the interest of the people.” Basically, this article is another proof for passing the constitution and with this article, monopolies will be legal.
We can go deeper into the article. If that type of law gets passed, who will decide which monopolies are the “possible types of monopoly” and how? Besides that, how will that be able to protect the interests of the people?
If you recall, a couple of years ago Minister of Justice of the RA David Harutyunyan announced that one cell phone operator is enough for Armenia and that having a second operator will not play a major role on prices. As soon as “Viva Cell” came into the field (nearly one month before) “ArmenTel” lowered its prices and it was clear that Mr. Harutyunyan was mistaken. As to how much the people lost during the past couple of years, I will leave that up to the people interested in calculating.
There is one more interesting thing: According to Mr. Rustamyan, “If we don’t fix the process, we can have many legal, shady monopolies.” I don’t know how a shady monopoly can be legal or vice versa. The fact is that the field is not in a suitable condition. As for “ArmenTel”, as we all know, it has been handed over to the OTE with a monopoly right. It turns out that this company has done shady business throughout the years. “ArmenTel” has the monopoly right in the telecommunications field until the year 2013. There is no doubt that the telecommunications field, which is really a natural monopoly, will be included in the list of “possible monopolies” and the status of “ArmenTel” will be legalized. The reader might get the impression that this whole article is about “ArmenTel”, however the problem is deeper. I am simply mentioning “ArmenTel” because that phone company is known by everyone and is the “most brilliant”.
But is this all necessary? Doesn’t the legislation allow us to control the monopolies in each field?
According to economist Tatul Manaseryan, we can achieve great heights if we only have the desire, by passing the new constitution and the laws. But for that we must have a political will. Which article of the existing constitution forbids the people to do thorough research and find out how did “ArmenTel”, the only provider of telecommunications, manage to lower its prices for cell phone minutes three times in one year, when foreign prices have neither gone up or down? This can only mean one thing: this company has taken advantage of it being a monopoly and has received large profits, which, as a matter of fact, is punished by law (the law about defending economic competition”). The speakers during the seminar base the change in the article and the necessity of passing the new law by claiming that no other country in the world puts bans on monopoly. However, Mr. Manaseryan denies that and states that there are countries that forbid monopoly both inside and outside the country, for example, the U.S. Everyone remembers how the “Microsoft” company split up years ago.
In addition, if we officially accept that this field has the characteristics of a natural monopoly, then those types of fields of economy remain under state control by taking into consideration their strategic significance. It is hard to say that something like this will happen in Armenia. All companies which are of strategic significance have been sold. In that case, do we really need this change or not? According to Mr. Manaseryan, the proposed amendment is declarative and is not that useful.
During the seminar, someone said the following: the problems regarding monopolies can not be solved without any theory. However, the thing is that everything is solved. Monopolies exist despite the effects that they may have. They are simply going to be legalized by law. I need to make a reference to art: Once there was a cartoon where the small penguin runs away from home and then says: “I always do whatever I want but then ask for permission…”