New Constitution: How to End Monopolies
16.12.2015
13:00
The major debates over the proposed constitution turned the spotlight on the government system. However, the proposed constitution, the authorities insist, will affect the economy and, especially, the component of competitiveness. The new document proposes changes in the policy of economic competitiveness.

Now, the Government, alongside with ensuring free market, commits to ending monopolies. The authorities describe these changes as a positive step forward. The opposition and experts, though, believe that an efficient struggle against monopolies comes from political will rather than constitutional changes. They recall such markets as sugar or banana markets where a single entity is dominant since the latter has “big financial resources and access to administrative leverages.”

Vardan Ayvazyan from the ruling Republican Party, economic analysts Hayk Gevorgyan and Babken Tunyan shared insights into the proposed changes and their impact on the country’s economy.

Monopolization is a vital issue the Armenian economy has to tackle because it affects the business environment. Armenia has the most monopolized economy among the CIS countries, the World Bank states. Monopolies have about 40% of the commodity market.

Vardan Ayvazyan, Head of the Standing Parliamentary Committee on Economic Affairs, believes the new Constitution focuses on the “anti-monopoly policy”.

“The Armenian market has monopolies for a variety of reasons – economic blockade, small size of the market, state support, financial levers, dumping, abuse of dominance, etc. The current Constitution cannot end monopolies since there is no ban on monopolies specified, and it is hard to prove in what cases the monopoly holder abuses its privileges,” Vardan Ayvazyan said.

Hayk Gevorgyan said in Moscow 1 kg of bananas costs 420 AMD, with the wholesale price being 300 AMD. In Armenia, the price makes 800 AMD per kg. The prices are high because the bananas are imported to the republic by one economic entity – the Catherine Group, which reportedly belongs to Mihran Poghosyan, Head of the Judicial Acts Compulsory Enforcement Service.

Babken Tunyan recalled the sugar market where lawmaker Samvel Aleksanyan is supposedly the monopoly holder.

Babken Tunyan and Hayk gevorgyan asked Vardan Ayvazyan why no competitors emerge in the market of bananas and sugar. Ayvazyan said he did not have a clear answer to that question. “Anyway, you cannot claim that the law is being violated. These people import goods and pay customs duties. The new Constitution proposes to end all monopolies, except those established by the state,” he said.

Ayvazyan believes one of the efficient models to combat monopolies is the U.S. model that envisaged distribution of Microsoft’s stakes among several companies.

Arshaluys Mghdesyan, Coordinator-Editor

 
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