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Armenian Business Leader Laments Unfair Competition

The chairman of Armenia's State Commission for Economic Competition Protection, Artak Shaboyan, says that there has been a tenfold increase in the number of fines imposed for competition infringements.
YEREVAN -- An Armenian business leader says unfair economic competition remains endemic in the country despite tougher antitrust measures implemented in the past year, RFE/RL's Armenian Service reports.

"Fair competition in our market still leaves very much to be desired," said Arsen Ghazarian, chairman of the Union of Industrialists and Entrepreneurs, Armenia's leading business association, on December 19 in Yerevan.

"Individual entrepreneurs, large enterprises, and trading networks having dominant positions...continue to abuse their positions, which increases the informal sector [of the economy] and makes other entrepreneurs want to replicate that style so that they can ensure their survival," he said. "As a result, we have a situation which often becomes unacceptable."

Ghazarian spoke at a meeting of a "public council" advising the State Commission for the Protection of Economic Competition (SCPEC), a purportedly independent but until recently largely ineffectual body.

The government -- and Prime Minister Tigran Sarkisian in particular -- have repeatedly pledged to create a level playing field for all businesses. Sarkisian has also acknowledged the existence of "oligopolies" that control lucrative forms of economic activity.

Early this year, the government pushed legal amendments through parliament that gave more powers to the SCPEC. Sarkisian demanded a strict enforcement of those changes at the time.

SCPEC Chairman Artak Shaboyan told the advisory council that the regulatory body has imposed fines this year totaling 370 million drams (about $1 million) on dozens of companies found guilty of violating competition rules. He said the figure represents a tenfold increase compared with 2010.

'Changes Can Be Felt'

Ghazarian acknowledged that the antitrust regulators have "started working more effectively." "We can't say that there has been a radical change; that those having dominant positions have entered the legal field, and that there are no abuses," he said. "We can't say that fair competition is the norm. But changes can be felt."

Ghazarian revealed in October that he and other members of the Union of Industrialists and Entrepreneurs had met with President Serzh Sarkisian to express concern about the problem. He said Serzh Sarkisian agreed with their concerns and pledged to remedy the situation.

The lack of fair competition has been particularly palpable in imports of fuel and basic foodstuffs such as wheat and sugar. They have long been effectively monopolized by a handful of rich entrepreneurs close to the country's ruling establishment. Most of them not affiliated with, or are only nominal members of, Ghazarian's organization, which unites hundreds of entrepreneurs.

So far there has been little evidence of these de facto monopolies being broken up by the authorities.

Ghazarian also complained on December 19 about what he described as the privileged treatment of some businesses bidding for state-procurement contracts.

For his part, Shaboyan said that the integrity of such bidding processes is "extremely important" for the broader competition environment.

"We have started examining this area and will work consistently in this direction," he added.

Read more in Armenian here