Prepared changes in the legislation for retail chains and pricing pose serious risks for consumers. This was warned by senior researcher from the Institute for Market Economics (IME) Petar Ganev in “Hello, Bulgaria”. In the studio, he analyzed the latest draft laws that MPs are preparing to vote on.
Ganev expressed his concerns about two main bills – the one for the adoption of the euro and the Supply Chain Act, which, according to him, lay the foundations for administrative interventions on prices, limiting promotions and introducing mandatory quotas for Bulgarian goods.
„Texts are currently being prepared that give the Council of Ministers the authority to introduce measures in the event of an „extraordinary price increase“ of goods, without defining what this means”, said the economist. According to him, such ambiguity hides serious risks for unpredictable administrative interventions, including price ceilings and regulations on markups.
„This is a mechanism that is very reminiscent of the emergency measures during COVID, when the government was given full carte blanche to declare a state of emergency. Every bureaucrat who has been given power tends to use it to the maximum,“ commented Ganev.
He stressed that another dangerous measure is the limitation of trade promotions – according to the new texts, discounts will not be able to exceed 10%. “This will put an end to the usual discounts of 20-30%, and in some cases up to 50%, which consumers have come to expect,” warned the economist.
Particularly worrying, according to Ganev, are the texts that introduce mandatory quotas for Bulgarian goods. The bill stipulates that retail outlets must provide at least 80% Bulgarian production in the milk assortment and 50% for other basic goods. “Although at first glance this may seem like a measure in favor of domestic production, in fact it will create prerequisites for higher prices and deficits,” he explained. Ganev pointed out that in some product groups, Bulgarian production cannot fully cover consumption, and the forced imposition of quotas will reduce competition and eliminate the possibility of imports exerting price pressure.
“These measures will benefit the largest producers, who hold a larger share of production and dictate prices. Small producers, who will have difficulty complying with the new regulatory requirements for supplies and contracts, will be hit hardest”, he added.
Ganev reminded that similar attempts to introduce quotas have been made in the past, which led to the opening of a punitive procedure by the European Commission against Bulgaria. According to him, if these texts are adopted, it is very likely that the country will again face sanctions for violating the principles of the EU's free internal market.
According to the economist, the philosophy behind the bill is lobbying and serves the interests of certain sectors in agriculture. “The Ministry of Agriculture is strongly influenced by large producers who are looking for a guaranteed market and lack of competition, while at the same time not wanting to make price concessions through promotions“, he said. “When a ceiling is set on promotions and a market share is guaranteed by law, a comfortable environment is created for maintaining high prices without fear of competition. Ultimately, all consumers will pay the price“, the economist added.