In Armenia butter is sold 3-5 times more expensive than its customs cost and vegetable oil is sold 2-3 times more expensive. This fact, which is well-known by everyone, was yesterday officially stated by the Chairman of the State Commission for the Protection of Economic Competition (SCPEC).
It’s known that the importation of certain products is the monopoly and no one doubts that the importers receive excessive profits. Of course, the price shift of many products was over 40% during the last 2-3 months. These include vegetable oil, butter, flour but no one doubts that the importation of those goods can provide 300-400% profit. And yesterday during the SCPEC session it became clear that monopolist importers and the owners of retail stores have lost their conscience and are numbed by the temptation of making millions. Moreover, no matter which of the product markets is examined by the SCPEC MP Samvel Alexanyan’s “Salex Group” CJSC is going to be present there. Thus, the mentioned company imports New Zealand butter and “Avedov” and “Solnichnaya dolina” vegetable oil.
As usual the company hasn’t sent any representative to yesterday’s session no release was issued. But the Commission based on the information of the Customs Bureau has found out that the customs price of 1 kilo of butter imported by NA MP Samvel Alexanyan’s “Salex Group” CJSC, is 582 AMD. The company hasn’t imported any butter since then. The price of the butter in the markets was 1700 AMD per kilo in August; in September – 2000 AMD, in October – 2200 AMD. Moreover, the vegetable oil was also imported in May. In August it was sold at 550 AMD, starting from September at 850 AMD and from October at 1000 AMD. And during this period the customs cost of the vegetable oil has not only been increased but also slightly decreased. According to the Customs Bureau data the customs cost of sunflower oil before August has reduced by 14 AMD and 12 AMD was reduced for the maze corn oil. However, the price of “Avedov” oil in August shifted from 550 to 650 AMD. In September the price was 850 and in October the price reached 950 AMD. Same story is connected with the Finnish butter imported by “Marnik” CJSC. The consumption price of that sort of butter reached 2600 from 1850 during August-October months.
The sharp rise in natural oil was caused by an uncompetitive arrangement reached among companies. “Compared to the international prices, in our republic the prices went up several times more. That’s why we had to take up measures,” Committee Chairman Ashot Shahnazaryan said. “Over the past three months the price of butter has gone up from 1900 drams to 2600 in the result of an anti-competitive agreement between economic entities. The entities state that invoices for some goods will go up from November which has caused rise in prices. Prices have gone up before importing the goods to the country. This is an ordinary routine. Expectations usually promote rise in prices. We simply try to control the tendencies and speed. We have fined the entities up to two percent of the 2006 profit. We cannot force them to lower prices but we assure you that prices won’t go up in the future. The recent rise in prices in the Republic of Armenia is determined by rises at European markets,” the SCPEC chairman says. Also, during yesterday’s session consuming organizations were also present.
Hrachya Mkrtchyan, representative of the “Yeritsyan and son” CJSC was present at the session. He wasn’t even able to explain why the butter price in their store has reached 2300 AMD from 800. Instead of giving explanations Mkrthcyan has started to blame the Commission of not properly conducting their examinations. He has also made a sensational statement, according to which the entrepreneurs have raised the prices in order to collect money during the upcoming increase of butter and oil price. The Commission stated that the size of the penalty is 2% of the annual receipts of each of the economic entities, but no more than 300 mln AMD. The companies were instructed not to violate the law on competition any more. The interesting thing is that the Commission doesn’t anticipate that the prices of the mentioned good will be lowered after the regulation is settled. But in general the SCPEC, which created an image of an entity to struggle against price shifting, is also involved in the whole “show”. For example, during yesterday’s session they didn’t publicize numbers about excessive profits of Samvel Alexanyan. Although even if Alexanyan is fined at 300 million AMD, which is 90 thousand USD, it will make only 2% of the profits he had attained. Perhaps, even less then 2%.