The State Commission for Protection of Economic Competition Records Improvement in the Butter Market

The State Commission for Protection of Economic Competition in Armenia conducted a study in 2019 on the "Butter" commodity market, taking into account the high level of concentration noted in previous years as well as the significant share of butter in the minimum consumer basket. This information was provided by the Commission.

The purpose of the study was to identify existing competitive issues in the supply chain from import and production to final sales to consumers, and to assess the impact of legal regulations in the turnover area on the current competitive environment. The studies revealed that between January and October 2019, approximately 2,727 tons of butter were imported to Armenia by a total of 36 economic entities. Compared to the same period the previous year, imports have decreased by 9%, alongside a 5% decrease in the average customs value per kilogram, while the volume of domestically produced butter in Armenia has increased by about 46%, which has also been accompanied by an increase in the number of butter-producing companies (from 28 to 30).

The Commission also noted the entry of four new economic entities into the butter import market, which imported approximately 127,740 kg of butter during the given period. Meanwhile, eight economic entities ceased their import activities, which had imported only 64,572 kg of butter from January to October 2018.

During the observed period of 2019, the volume of butter exported has increased approximately fourfold, reaching 52 tons, with the number of exporting companies rising by two (from three to five).

During the analyzed timeframe, retail prices for butter (in the high price segment) fluctuated around 4,700 to 4,300 AMD, reflecting a dynamic decrease. The studies also noted that in many retail outlets (especially in large retail chains), butter, spreads, and margarine are often displayed together, which may cause confusion among consumers, particularly when sold by weight.

To address this issue, the Commission has proposed to establish a legislative requirement for the separate presentation of these products in retail outlets.

Despite the fact that the "Butter" commodity market continued to be considered highly concentrated during the observed period of 2019, the indices indicating market concentration have significantly decreased compared to the corresponding periods of 2018, indicating an improvement in the competitive environment within the market.