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Armenian Sugar Price Hike Under Scrutiny

YEREVAN -- Armenian state regulators are promising to investigate a more than 20 percent surge in the retail price of sugar which will further raise the cost of living and could hamper government efforts to curb inflation, RFE/RL's Armenian Service reports.

The State Commission on the Protection of Economic Competition (SCPEC) has demanded a formal explanation from the Aleks-Grig company that enjoys a virtual monopoly on sugar imports.
"They have to provide all documents relating to the price at which they purchased the sugar abroad, the country of manufacture, the import tariff, and the price at which the sugar is sold to local shops," SCPEC spokeswoman Gayane Sahakian told RFE/RL.

One kilogram of sugar cost an average of 440 drams ($1.20) in supermarkets and food stores across Yerevan on August 24, up from roughly 350 drams just two days earlier.

Samvel Aleksanian, a wealthy businessman who owns Aleks-Grig, was quoted on August 23 as blaming the price hike on external factors. He said sugar prices on international commodity markets have sky-rocketed this year.

Sahakian said Aleks-Grig will have to prove its claims in writing in the next 10 days. The SPEC will then examine the documentation and decide whether the
company has violated Armenia's antitrust law and regulations, she said.

The price rise will primarily affect socially vulnerable members of the population. They have already been hit hard by a significant increase in consumer price inflation since 2009.

"Sugar sales have already gone down a lot as people don't have money," one Yerevan shopkeeper said.

In a recent interview with RFE/RL, Prime Minister Tigran Sarkisian acknowledged that the higher inflation rate is the result not just of objective factors, but also of a lack of competition in imports of basic foodstuffs, fuel, and other commodities.

The most lucrative imports are controlled by Aleks-Grig and a handful of other companies belonging to entrepreneurs with ties to the government. Sarkisian has repeatedly pledged to do away with these "oligopolies."

Earlier this year, the Armenian parliament approved a government bill giving more powers to the SCPEC and considerably increasing the financial penalties for unfair business competition.

Armenia's heavy dependence on sugar imports was supposed to end with the construction by Aleksanian of a sugar refinery in the northwestern province of Shirak that was completed in late 2009. The tycoon claimed to have invested about $100 million in the modern facility, which President Serzh Sarkisian inspected during a visit last year. It is not clear if the plant is currently operating.

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