Troika says Greece must dismantle barriers to competition for review to conclude

The troika has warned Greece that the ongoing review of its adjustment program will not be completed in February unless Athens adopts the dozens of recommendations made by the Organization for Economic Cooperation and Development (OECD) for removing regulations that distort competition.

In an e-mail sent by Greece’s lenders to Development Minister Costis Hatzidakis, which has been seen by Kathimerini, the troika says it is unable to see how the review can be concluded if the Greek government does not remove the barriers to competition identified by the OECD or provide satisfactory explanations for leaving some of the regulations unchanged.

The e-mail expresses officials’ “concern” about reports that suggest the government is encountering opposition to its efforts to implement the OECD’s so-called tool kit. The troika says that these reforms are of “central importance” to improving the competitiveness of Greek businesses, reducing prices for local consumers and creating jobs. The country’s lenders also note that adoption of the OECD’s recommendations would send an “important message” about the government’s appetite for reforms.

After an 11-month study, the OECD identified in November 555 regulatory restrictions which it says undermine competition. The Paris-based organization made 329 recommendations on legal provisions that should be amended or repealed. The OECD estimates the benefit to the Greek economy would be around 5.2 billion euros, or roughly 2.5 percent of gross domestic product, as a result of “increased purchasing power for consumers and efficiency gains for companies.”

The barriers to entry identified by the OECD include the definition of fresh milk as produce that has a shelf-life of five days and the exclusive distribution of over-the-counter medicines by pharmacies. The think-tank recommends relaxing constraints on the operation of businesses and their commercial practices, such as Sunday opening for retail stores, and the establishment of pharmacies. It also proposes the scrapping of third-party levies, such as a tax on cement, on the wholesale price of medicines and on flour.

Some of these proposals, though, are encountering opposition within government, let alone beyond the confines of the coalition. PASOK and Health Minister Adonis Georgiadis opposes allowing super markets to sell non-prescription medicines. Agriculture Minister Athanasios Tsaftaris is against the idea of extending the permissible shelf-life of fresh milk, arguing that this would allow cheaper imports to flood the Greek market.

“Is a saving of five to 10 cents a day for a four-member family worth sending Greece’s dairy farmers into extinction?” he wondered while addressing Parliament on Thursday.