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Armenian Business Leader Laments Unfair Competition


Armenia - Prime Minister Tigran Sarkisian and members of the Union of Industrialists and Entrepreneurs discuss fresh changes in tax legislation, 12Oct2011.

Armenia - Prime Minister Tigran Sarkisian and members of the Union of Industrialists and Entrepreneurs discuss fresh changes in tax legislation, 12Oct2011.

Unfair economic competition remains endemic in Armenia despite tougher antitrust measures taken by the authorities this year, the head of the country’s leading business association complained on Monday.

“Fair competition in our market still leaves very much to be desired,” said Arsen Ghazarian, chairman of the Union of Industrialists and Entrepreneurs

“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. As a result, we have a situation which often becomes unacceptable,” he said.

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

The Armenian 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 through the Armenian parliament legal amendments that gave more powers to the SCPEC. The premier demanded a strict enforcement of those changes at the time.

The SCPEC chairman, Artak Shaboyan, told the advisory council that the regulatory body has imposed this year fines 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 over 2010.

​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, 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 have met with President Serzh Sarkisian to express concern about the problem. He said 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 uniting 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 Monday about what he described as privileged treatment of some businesses bidding for state procurement contracts.

Shaboyan said in this regard that the integrity of such biddings is “extremely important” for the broader competition environment. “We have started examining this area and will work consistently in this direction,” he told journalists.
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