The State Committee of Economic Competition Protection (SCECP) has published a report on survey in the market of cheese. People have been waiting for such information or at least explanation for a long time. The SCECP has really did some work and found out certain things, which surprise both the commission and the society. Following the rapid growth of the price of cheese this commission announced that this market is not centralized, there are 78 registered companies. They came to the conclusion that hardly any of the companies would be able to decide the prices in the market. “In a market consisting of 78 companies an anti-competition arrangement or agreement is almost impossible,” officially announced the commission. They say that during the past ten years this market has not been centralized, and they talked to several producers and found out that this was a result of the increase of the prices of milk.
However, later they give a place to the demands and decided to survey the market, especially the 16 largest companies. “The survey shows that the largest company out of these 16 ones is the Ashtarak Kat company, which occupies 30% of the market, to the extent of being close to being recognized as a company which dominates in the market. But according to the existing legislation this company cannot be considered dominant notwithstanding its position in the market. Currently the parliament is discussing a bill, as a result of which the Ashtarak Kat company may be considered dominant in the market,” writes the statement released recently. The mentioned commission has found out that the first company to raise the price of milk and cheese was the Ashtarak Kat company, and the other small companies followed their example. It means that this company is dominant in the market.
Why did they raise the price of cheese, what was the reason? “As for the reasons of increasing the price of cheese, all the 16 monitored companies claim that the reason was the growth of the price of milk. As a result of monitoring it turned out that the milk the companies buy is more expensive now, but the growth of the price of milk does not correspond to the growth of the price of cheese,” announced the commission. There is no answer to the question why the price was increased. There is no answer to the question why the biggest company of the sector increased the price either.
Instead of that they have found a number of important violations. “In 2009 a lot of milk powder was used in milk production. This year all the producers used natural milk. In order to check this information the commission sent several types of products for expertise. As a result of expertise they found not only milk powder but other materials too. Such material is soda, which is prohibited to use in milk production.”
It is not a secret that milk powder is used in milk production, but as for using soda, it would be better to publish the names of those companies. The consumers have the right to know which companies are violating the norms of food production. The commission will send this information to the ministry of agriculture and we hope that they will make this information available to the society. The other piece of important information the commission has published is the following: ‘’The research has found out that the selected 16 companies are producing 80% of the capacity of cheese in the market. But when comparing this information with the information provided by the statistical services, their capacity in the market is 7-8%. The conclusion is that there are hidden circulation capacities in this market, thus that information was sent to the tax bodies as well.” This is too much for companies and in fact it shows that companies show much less circulation and production than the real capacity, thus the biggest part of these businesses is not taxed. We can imagine what is happening in the other sectors too and how the difference between the official statistics and the real situation can be.
Generally the commission has not discovered any new things as the society knows about these things, but it is very rare that a state institution would speak of the bad situation or violations, shortcomings in any business sector. We hope that this commission will learn the lesson and next time will not announce that everything about competition is good.