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Competition Authority: The prices set by the fuel board have had negative consequences

2023-01-26 07:47:21Biznes SHKRUAR NGA REDAKSIA VOX

Competition Authority: The prices set by the fuel board have had negative

The Competition Authority has finally expressed an official position regarding the Transparency Board for the determination of fuel prices in the country.

In the decision that had as its object the preliminary investigation of the oil and gasoline market, the governing body of this institution, the Competition Commission, judges that, in a normal situation, the recommended prices, as well as the fixed ones, can have negative effects on competition.

"Recommended prices can help coordinate prices among competitors as a result of transparency and can mislead consumers about a reasonable price level. Fixed prices are regulatory instruments, but they have an effect on competition and reduce consumer benefits that are the result of market competition. Also, fixed maximum prices can protect the consumer from high prices in the market, but create a lack of effective competition," the Competition Commission's decision states.
Often, the Competition Commission has come up with recommendations for the Albanian government regarding issues affecting competition in the market, but in this case it has not done so and has preferred to avoid an explicit position regarding the fact whether it should be used or not the maximum fixed price instrument in the current situation.

However, in the justification of the investigation decision for the wholesale fuel market, the Competition Commission states that "since the profit margin is applied on the weighted average cost of the product which is different for different companies, therefore the selling price on which the margin is applied must be different between competitors, but this price must not exceed the maximum level determined by the Transparency Board".

In March of last year, the Albanian government decided, through the normative act, to establish a Transparency Board, which determines a maximum wholesale and retail sale price for fuels, based on their price on the Stock Exchange and recognizing on this price some fixed costs and profit margins. This decision was motivated by the extraordinary situation created after the outbreak of the war in Ukraine and by the need to protect consumers from the sharp rise in prices.

Many experts have considered price fixing wrong because this practice harms competition and reduces price elasticity. Although the prices set by the Board are considered ceiling prices, in fact most of the fuel retailing companies and especially the larger ones, in fact, never lower the prices below the level set by the Board./Monitor


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