A trade unionist has provided worrying information about mark-ups.
The President of the Confederation of Bulgarian Trade Unions Plamen Dimitrov defended the measures being prepared by the government against high food prices and market concentration. In the program “Interview of the Day“ on BTV after a meeting in the Council of Ministers with the participation of Prime Minister Rumen Radev, ministers, business organizations and trade unions, he stated that the changes aim at more competition and a fairer distribution of profits along the food chain.
“I believe that they are measures in support of competition“, said Dimitrov. According to him, the big problem is the concentration of market power in the hands of large retail chains and the lack of real competition.
He emphasized that the Commission for the Protection of Competition (CPC) should have a key role. According to him, the new legal changes will give the regulator more powers to react when non-market influence and unfair trade practices are established.
Dimitrov pointed out that the sectoral analyses of the CPC have shown serious problems in the food chain.
„The overcharges are massive, around 80-90%, there are even 135%, established by the regulator for mineral water“, Dimitrov gave an example.
He also linked the high prices to the crisis in Bulgarian production: „The number of farmers who raise goats, sheep and cows has decreased by between 60% and 70% in Bulgaria.“
According to him, this leads to a decline in milk production and to „total import of dairy products“.
The union leader gave an example of the practices of commercial chains in Germany.
„What the same chains are doing in Germany is about a 35% maximum ceiling on markups. If they can do it in Germany, they should be able to do it in Bulgaria too“, commented the unionist.
According to him, the difference between the current high markups and the lower levels can be shared between producers and consumers, so that prices can drop by between 5 and 10%.
Dimitrov also defended the idea of limiting markups, despite criticism from economists that such measures lead to deficits and inflation.
He pointed to the example of Greece: „In Greece, there are 1,000 goods with a markup ceiling. There is no additional inflation and no deficits.“
According to him, it is not necessary to fix an exact percentage by law if market participants reach an understanding for lower markups.
One of the most controversial issues remains the concept of “fair price“, which will be developed in a special methodology over the next three months with the participation of regulators, business and unions.
“This is the most important issue and will be defined in the methodology, which will be developed within three months“, specified the president of the CITUB.
Dimitrov emphasized that the concept is not new in economic theory: “Adam Smith still talks about a fair market price in “The Wealth of Nations“.