We proceed with the details of the online session on antitrust measures and approaches in the pandemic era from April 30.
Prices transmit information. The price system automatically disseminates information to all market participants about an increase or decrease in demand for a particular type of product. This encourages them to increase or, conversely, reduce the volume of production until again, the rise or fall in prices sends signals about a shortage or overproduction of marketable products. Normally, in markets, prices are set under the influence of supply and demand, that eventually settle at the equilibrium point. However, there have been ongoing debates on whether the state should pursue its own pricing policy, control the level of prices for goods and services in the time of the pandemic. The price system is complicated due to distortions in price information, which is explained by a number of reasons. First of all, it is worth noting government intervention in economic processes. The negative role is played by the activities of monopolies seeking to maximise profits by artificially inflating prices.
The speakers also discussed this problem during the sessions, where experts had ann opportunity to share their different points of view and present the experiences and courses of action of the competition commissions from different countries.
Ioannis Lianos, a President of the Competition Authority of Greece and a Professor in University College London, has started his presentation with outlining the problems encountered by Greece's competition authority and its approaches to dealing with the new challenges posed by the pandemic. According to him, the main two issues that Greece's competition authority faced in the economic sphere were the shock in the demand side and supply side. The demand has risen drastically due to the increased interest in buying healthcare material, and the suppliers could not catch up with the required output in the beginning, which has led to the price rises. In this type of shocks, the market takes time to adjust, but nevertheless, people were concerned with the price rises. Greece's competition authority has taken action and decided to monitor the market much more extensively and develop new tools if needed to work in unique circumstances. It has also started an investigation in healthcare sectors – collected the information from over 3000 firms in Greece to assess in-depth the costs and prices. The second area of focus President Ioannis pointed out was the food sector, where the consumer agency in Greece has implemented price regulations.
Veljko Milutinovic, a director of the Balkan Dialog Research Center and an ex-commissioner of the Serbia Competition Commission, has similarly shared the Serbian experience that has used price controls to prevent the drastic price increases during the pandemic.
The next speaker, Mr Timofey Nizhegorodtsev, the head of the department for control over social sphere and trade of FAS Russia, on the contrary, was very happy to see the markets acting predictably - trying to find a new equilibrium through the changes in prices. He said: – "the reaction is logical". He continued by stating that: - "In the long periods of stability, we forget what a real purpose of competition commission is, and in many countries, we see how the governments are trying to regulate the prices during the shift of the equilibrium caused by the fundamental economic laws – not by the criminal intent". He underlined that under current circumstances when competition commission getts involved in price regulation, it only leads to an increased deficit and greater shortages, thus increasing the problem.
Mr Nizhegorodtsev has shared the experience and approach of the FAS Russia to the price rises. He said that they had allowed the increase of the prices in order to stimulate the economy and markets to act in a way that would compensate the deficit of the goods by attracting it from markets where the producers experience regulatory problems. This caused the increase of production of the required products, filling the gaps in the market, thus allowing to settle the new equilibrium. He also pointed out that to facilitate the faster adjustment to the increased demand Russia has lowered the tariffs for all the supplies medical that can be used for treating dealing with COVID -19. Furthermore, Mr Nizhegorodtsev underlined that now businesses and government must cooperate to adjust rapidly changing situation to lower barriers of entry to let the producers compensate increased demand.
Different countries choose different approaches, as well as different experts, have different opinions on the topic of price controls during the pandemic. To control, or not to control is the question that does not have one answer and only with time, we will be able to see the consequences of the decisions implemented now.