site.btaAssociation for Modern Trade Warns that State Intervention on Food Market Would Be Highly Detrimental

The Association for Modern Trade (AMT) on Friday objected to proposed legislation to set caps on staple food prices and markups in Bulgaria. The association warned that state intervention on the food market would inflict serious detriment on consumers and the economy.

Proposals concerning food prices are contained in two bills moved on Thursday and Friday by BSP-United Left and Movement for Rights and Freedoms – New Beginning, respectively. The two political forces are anxious that hundreds of thousands of citizens cannot afford the most basic food products due to high inflation. Four civic organizations plan a boycott of supermarkets on February 13.

The AMT said in a press release that the two bills envision direct administrative intervention in the pricing policies of businesses on the food market. It said such a step would be counterproductive for consumers and all other market participants. It would not help attain any of the desired objectives; on the contrary, it would aggravate existing problems and create new ones.

Attempts by other European countries to use similar mechanisms have spurred inflation, the AMT noted. In Hungary, it said, the effort pushed food price inflation to the highest level in the EU in 2023, almost 50% on an annual basis, and caused shortages of some of the targeted products. Since Romania limited the markups on a range of essential goods in the summer of 2023, it has recorded higher food price inflation than Bulgaria. In Croatia, food price inflation has also been higher than in Bulgaria since the Western Balkan country imposed a price ceiling on some foods in September 2023, the organization said.

It argued that the markup caps and quantity requirements proposed in Bulgaria are contrary to EU law and can be viewed as non-tariff barriers to intra-Community trade.

In a number of decisions, the Bulgarian authorities have concluded that the prices of staple foods such as sunflower oil, flour, eggs, dairy products and pork are based on objective economic factors and the international situation, the press release went on to say.

The AMT remarked: "This latest attempt to limit competition by setting the public against particular market participants is wrongly targeted, has ulterior motives behind it, and can potentially inflict grave damage on the national economy, free competition and consumer choice. A solution to the problems about the affordability of food products ought to be sought in improving the business environment, investments, raising productivity and the people's standard of living."