In recent months, the topic of food prices has once again become one of the most discussed in society. The reason is simple - when incomes grow slower than expenses, people begin to ask who benefits from this and why the state seems powerless.
A few years ago, one of the largest food chains in Bulgaria reported nearly 100 million leva in annual profit after taxes. This means an average of about 10 million leva in net profit per month. This is not a violation of the law and is not something reprehensible in itself - every company exists to make a profit. But when society asks why prices cannot be lower, the answer often lies precisely here.
Any serious price reduction means less profit. If a company earns nearly 100 million leva per year, it obviously has the opportunity to give up part of this financial result. The question is why would it do it voluntarily if there is no strong enough competition to force it. The market works this way - prices do not fall due to the goodwill of traders, but due to pressure from competitors. This is where the big Bulgarian problem begins.
A dozen years ago, there were significantly more large players on the Bulgarian market. The Penny Market chain left Bulgaria in 2015, closing over 40 stores and freeing up a market for over 200 million leva in annual turnover. A little later, the French Carrefour also withdrew after accumulating serious financial problems and unsuccessful attempts at restructuring. The Bulgarian Piccadilly chain, which was among the market leaders for years, was declared bankrupt in 2017.
The result is visible today. The market is gradually concentrating in the hands of a few large chains. Formally, there is competition, but in reality, the choice is limited. When a few large players hold the main part of the market, the incentive for aggressive price competition decreases. Instead of a constant battle for the customer, similar pricing policies and similar commercial practices are often observed.
That is precisely why the conversation about the prices of basic food products should not be reduced to inspections in stores or temporary campaigns against overcharges. The real question is why Bulgaria failed to create conditions for more competition. Why did some chains leave the market, while others never entered? Why is a relatively small number of large players dominating in a country with over six million consumers today?
However, the problem is far from limited to the food sector.
We see a similar picture in mobile services. The Bulgarian market has been controlled by a few large operators for years. At the same time, the so-called virtual mobile operators (MVNOs) are successfully operating in many European countries. They do not build their own infrastructure, but use the networks of large companies for a fee and offer more flexible and cheaper services. It is these operators who create additional competitive pressure and lead to lower prices for consumers. In Bulgaria, such a model has never managed to develop on a significant scale.
The same applies to the energy sector. The country is divided between three large electricity distribution companies, each with its own territory and practically guaranteed market. The consumer has no right to choose who will maintain the network and deliver electricity to his home. The lack of real competition leads to a lack of incentive for better service and more efficient prices.
Here we come to the most important question - what does it actually mean for the state to protect the interests of citizens?
It does not mean administratively setting prices. History has repeatedly shown that such measures lead to deficits and market distortions. But it means guaranteeing conditions for real competition. Removing barriers to new participants. Encouraging the entry of new investors. To monitor market concentration and prevent economic structures that limit consumer choice.
Because true competition is the best social policy. It lowers prices without government subsidies, increases quality without administrative orders, and increases choice without bureaucratic programs.