State antitrust regulators fined Armenia’s largest fuel-importing company 100 million drams ($258,000) on Wednesday for abusing its dominant positions in a sector notorious for lack of competition.
The State Commission for the Protection of Economic Competition (SCPEC) said the City Petrol Group (CPG) company has resorted to price dumping to drive scores of small gasoline retailers out of business. It said the retail prices of gasoline and diesel sold at CPG-owned petrol stations across Armenia have been the same as the wholesale prices set for much smaller firms buying fuel from the company.
According to the SCPEC, the retailers have thus been forced to operate with no profit margins or sell their stations to the CPG. The latter has already purchased dozens of such stations as a result of what the commission considers a dishonest pricing policy.
“CPG was particularly active in taking over small businesses in the regions [outside Yerevan,]” Arman Manaserian, an SCPEC official, told RFE/RL’s Armenian service (Azatutyun.am). He said seven of CPG’s eight filling stations in the northern city of Vanadzor were purchased in this fashion.
CPG representatives were conspicuously absent from a SCPEC meeting that announced the penalty. Manaserian said the company denied any wrongdoing in a written explanation submitted to the commission earlier this year. The company, which accounts for over 40 percent of fuel imports and boasts the largest chain of gas stations in Armenia, could not be reached for comment on Wednesday.
The Armenian fuel market has long been effectively monopolized by a handful of companies owned by individuals with strong government connections. There are still no indications that the highly lucrative fuel imports have been affected by the Armenian government’s stated efforts to improve the business environment and enforce fair competition.
Hrant Bagratian, a former prime minister affiliated with the opposition Armenian National Congress (HAK), dismissed the SCPEC sanction against the fuel company as insignificant. “The maximum [antitrust] fine is set at 300 million drams,” Bagratian told RFE/RL’s Armenian service. “People readily pay 300 million drams and then make 30 billion or 300 billion drams in profits.”
Bagratian said that instead of imposing fines the regulatory body should simply confiscate all profits made by a particular company through unfair competition.
Manaserian rejected the idea, saying that the SCPEC does not want to drive businesses into bankruptcy. He insisted that the fine slapped on CPG will make a difference.