The Gasoline Business is a Greasy Bite. Will the Government Resist Its Temptation?

"168 Hours" newspaper writes: "Recent developments in the gasoline market have shown that the results of the fight against monopolies, which the government speaks of, are greatly exaggerated. In reality, not much has changed in the market since the change of power.

Like before, prices rise and fall inexplicably; this happens simultaneously across the board, as it did previously, and competitive phenomena in the market are not observed. The claim that centralization has decreased and major players have lost their positions is far from reality. What has been said does not reflect the actual picture.

In discussing the fight against monopolies, the government has repeatedly boasted that it has achieved unprecedented success in a very short period. In several highly centralized markets, the participation of major players has significantly decreased. Markets such as sugar, bananas, and gasoline are usually cited as examples. These are markets that have consistently stood out for their high levels of concentration.

It has long been said that prices in these markets are artificially high. While these claims have not been baseless, the Economic Competition Protection Commission has never identified such cases. Perhaps this is one of the reasons why public confidence in the activities of the Commission has always been low.

What will change in the near future is still hard to predict. At this stage, the Commission is undergoing a so-called reorganization. It has a new president, and its composition is changing. How this will affect public perceptions depends on the future work of the body.

In the near future, the new president of the Commission is expected to face its first test: an investigation into the gasoline market to identify the reasons behind price fluctuations. When results will materialize is unknown. The Commission typically takes a long time to work. So long, in fact, that the findings of the investigation often become outdated and lose their relevance.

Nevertheless, while the Commission studies the gasoline market, an addition of participants is anticipated. Deputy Prime Minister Tigran Avinyan recently announced in the National Assembly: "Structural changes will occur in the coming six months to a year. We anticipate that a new player will soon enter the market, which will weaken the oligopolistic positions of certain companies."

Immediately after the change of power, the government declared that there were no longer monopolies in Armenia. To create the impression of how unprecedentedly successful it had been in just a few months, the results recorded in the sugar, banana, and gasoline markets were circulated.

Although one of the two major participants in the gasoline market has lost its position, this has not led to a reduction in centralization. During the same period, the position of the second major player in the market has not only strengthened but also expanded. In other words, there has been a deepening of market centralization in the hands of one company, which, of course, is a worse situation from the perspective of the competitive environment.

Instead of reflecting on this, the government is now pinning its hopes on a new company that is supposed to come in and change the gasoline market. We have faced such situations before. "Max Petrol" came in, and prices dropped considerably within a short period.

It seemed that the time had come to establish real competition in the gasoline sector. However, it turned out not to be the case; we are dealing with a usual redistribution of the market.

After some time, everything returned to its previous state. The number of market participants simply increased by one, while the shares of others slightly decreased. However, the competitive situation in the market did not change at all. Consumers did not gain anything either.

For any government, the gasoline business is a greasy bite that is impossible to pass by indifferently."

For more details, see today’s issue of the newspaper.