Albania monopoly ordered to revise abusive rents hitting consumer prices

Tirana Times
By Tirana Times September 11, 2018 15:11

Albania monopoly ordered to revise abusive rents hitting consumer prices

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  • The watchdog says the company has abused its monopoly position at a time when traders have no other alternative to sell their products, leading to excessive profit rates, which according to the company's annual report with tax authorities reached at about two-thirds of its annual turnover

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TIRANA, Sept. 11 – Albania’s competition watchdog has ordered a monopoly company managing the country’s largest fruit and vegetable wholesale market to revise its abusive warehouse rental prices that are sharply increasing consumer prices.

The decision by Albania’s Competition Authority comes following a probe into Ekma Albania, the Albanian-owned company that has been running the Tirana agri-food wholesale market since 2015 under a deal with the municipality of Tirana.

The watchdog says the company has been charging significantly higher rental rates compared to average prices at the local area just outside the capital city at the entry of the Tirana-Durres highway linking the country’s largest two cities.

Monthly rental prices at the market facilities range from 1,000 lek (€7.8)  to 1,500 lek (€11.8) /m2 and 50,000 lek (€393) to 70,000 lek (€550) for vans and trucks, in prices considered too high by hundreds of local traders who have also earlier staged protests over abusive charges.

Competition authorities say local traders even face significantly higher electricity and water rates compared to standard prices charged by state-run companies on business consumers.

The watchdog says the company has abused its monopoly position at a time when traders have no other alternative to sell their products, leading to excessive profit rates, which according to the company’s annual report with tax authorities reached at about two-thirds of its annual turnover.

Authorities say the contracts that the company applies put traders at an unfavorable position, imposing discriminatory and unfair trading conditions by forcing them to negotiate lease contracts each month, and prepay for two months in guarantees without being offered anything in return by the lessor.

The watchdog has given the company a 30-day deadline to renegotiate contracts with local traders at reasonable cost-oriented rental prices also applied in the local area and stop higher electricity and water charges, warning that the company could face a fine equal to 5 percent of its turnover, about €125,000.

According to reports filed with the National Business Center, Ekma Albania, owned by three Albanian businessmen, reported net profit of 323 million lek (€2.5 million) for 2017, up 5 percent compared to 2016, at a profit rate of about 65 percent of annual turnover.

The Tirana agrifood market is the country’s largest and also serves as a distribution point for other markets in the country due to some of the biggest fruit and vegetable importers and traders being based there, indirectly increasing costs for every Albanian.

Albanian households, who have one of Europe’s lowest income but face one of the highest prices for their disposable incomes, spend about half of their monthly budgets, some 45 percent, on food and non-alcoholic beverages, the key item in the consumer basket, according to a survey by INSTAT, the state-run statistical institute. Vegetables and fruit, whose prices have soared in the past few years, account for a fifth of spending in this group, which is topped by milk, bread and meat.

Inflation rate in the country has been at 2 percent during this year, about 1 percent below the central bank’s 3 percent target estimated to have a positive effect on the country’s economy, despite imports having become much cheaper due to Europe’s single currency having lost 6 percent and trading at a 10-year low

Albania’s inflation rate has been running below the 3 percent target for five consecutive years, hinting sluggish demand and a slowly recovering economy which last year grew by a 9-year high of 3.8 percent.

 

 

 

Tirana Times
By Tirana Times September 11, 2018 15:11