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Armenian PM Orders Antitrust Measures


Armenia - Prime Minister Hovik Abrahamian chairs a cabinet meeting in Yerevan, 2Jun2016.

Armenia - Prime Minister Hovik Abrahamian chairs a cabinet meeting in Yerevan, 2Jun2016.

Acting on his pledges to de-monopolize lucrative business in Armenia, Prime Minister Hovik Abrahamian ordered on Thursday a set of government measures which he said will create “equal conditions” for all importers of fuel, medicines and basic foodstuffs.

Abrahamian said that while there are no “formal” monopolies in the country a handful of large companies control imports of these products, undermining competition, setting “unfounded” prices and even breeding corruption. He listed specific actions which should be taken by his staff, the Ministry of Economy and the State Revenue Committee (SRC) to address this “high degree of centralization.”

In particular, the Ministry of Economy was instructed to issue within a month detailed “guidelines” describing government rules, regulations and certification procedures for importing essential goods and commodities to Armenia. Prospective importers should have easy access to this information, Abrahamian said at a weekly session of his cabinet.

As part of the same effort, Abrahamian told his chief-of-staff, Davit Harutiunian, to launch a hotline for entrepreneurs complaining of unfair treatment by tax authorities and other manifestations of government corruption. Those complaints will be dealt with by the prime minister’s Oversight Service.

The premier went on to announce that starting from August 1, the SRC, the government’s tax collection agency, will release monthly reports on “uniform treatment” of all importers by the Armenian customs service. “The main focus here must be the creation of equal conditions for all economic entities, and any unfounded deviation must become a subject of internal inquiry,” he said.

More importantly, Abrahamian said that the Ministry of Economy and the SRC should explore the idea of banning wholesale importers from engaging in retail trade and requiring them to set the same prices for all buyers. This could stop them from “dictating rules of the game in the commodities market,” he said.

Such a measure, if approved by the government, would primarily hit Samvel Aleksanian, a wealthy government-linked businessman whose companies dominate the highly lucrative imports of sugar, wheat and other foodstuffs. Aleksanian also controls one of the country’s largest food supermarket chains.

The tycoon has long been accused of enjoying privileged treatment by tax authorities and strangling competition.

Many small and medium-sized businesses have for years claimed that the customs service, using its highly controversial discretionary powers, forces them to pay much higher import duties than the large importers do. “In some cases, they have to pay 20, 30 or even 40 times as much as large importers,” said Samson Grigorian, a small business owner. “Therefore, small businesses have no chance to prevail in competition.”

The antitrust measures ordered by Abrahamian stem from an ambitious reform agenda which he announced on May 12. He said “new challenges” emanating from the Nagorno-Karabakh conflict necessitate far-reaching economic reforms in Armenia.

Armenian opposition groups are skeptical about these pledges, saying that the country’s “oligarchic” political and economic system is essential for the ruling regime’s survival.

Deputy Prime Minister Vache Gabrielian insisted after Thursday’s cabinet meeting that the government is serious about tackling the problem. “The government thinks that there is a high degree of centralization … The government will do everything to enable businesses to have equal conditions,” Gabrielian told reporters.

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