“In reality, every additional cost imposed by network markets has some impact on prices. If these costs are brought under a framework consistent with international practice, it will, of course, ultimately have a positive effect on prices,” said Lasha Rizhamadze, head of the Georgian Distributors’ Business Association, before a planned meeting between the Prime Minister and representatives of distribution companies.

He also noted that they see an opportunity to maintain price stability.

“For the distribution sector, if fees imposed by retail network markets are brought under a regulatory framework, there is room to release funds and save on those fees, which will ultimately have a positive effect on prices.

In reality, every additional cost imposed by network markets affects prices. If these costs are brought under a framework consistent with international practice, it will, of course, positively influence prices.

Regarding distributors, a distributor and local producer are forced to accept the conditions imposed by network markets: so-called cashback, entry fees, shelf fees, and so on, which are ultimately reflected in the price. Documentedly it may appear that the price list comes from the producer, but in reality, funds from that price list are again mobilized to the retail network. In this regard, we see at least an opportunity to maintain price stability, if not a reduction,” Rizhamadze stated.

He also responded to the Prime Minister’s statement that the total average markup is 86%.

“We don’t know by what formula the 86% was calculated. Perhaps some products have such a markup, others less, and some more. It’s not caused solely by the network markets, but they do play a significant role. In reality, there are many other factors that ultimately affect prices, including banking products, higher costs abroad, and so on,” he said.

Regarding the seizure of documents from various companies by the State Security Service yesterday, Rizhamadze said it would have been better if companies had been informed in advance about law enforcement actions so that the operation would not have come as a surprise.

“For all sectors, the law enforcement action was somewhat unclear, considering that they actively cooperate with the Competition Agency and recently provided certain information. They are still ready to cooperate with any agency at any time. It would have been better if they had been informed in a way that the law enforcement agencies would conduct the seizure, so it would not have been unexpected. Otherwise, there is no problem - any agency can at any time seize any type of document from distributors or local producers,” Rizhamadze noted.