ECONOMY

A study finds industrial sector too concentrated

Oligopoly conditions in the Greek industry are to blame for high prices, the Competition Commission said in a statement yesterday. The commission referred to a study it conducted jointly with the Athens University of Economics and Business, which concludes that the degree of concentration in Greek industry is much too high, almost double the levels the European Commission has deemed dangerous for competition. The study examined 245 sub-sectors of Greek industry and, specifically, the financial data of firms belonging to these sub-sectors from 1996-2002. The aim was to see whether these sectors had followed the rules of free competition and to measure the impact of policies designed to promote competition. Furthermore, the commission wants to create a database on competitive conditions in the Greek market that would facilitate its intervention in cases of cartel formation or of a company taking undue advantage of its dominant position in the market. As the commission itself remarks in its statement, «strong potential and technological competition usually has an adverse effect on the development of monopolistic power, since they force enterprises to become more efficient over time by reducing the cost of production and, by extension, prices.» Such conditions are missing in the Greek market and little has been done to promote technological innovation. There is no fear of potential competitors, resulting in policies that do not favor the creation of new domestic enterprises and have, so far, discouraged foreign investment. Despite the government’s assertion that a new law on investment incentives will change things, there is skepticism about whether the incentives offered, in the form of lower taxes, for example, are adequate. Enterprises are also hampered by the excessive regulation of the labor market, as the Federation of Greek Industries (SEV) has repeatedly pointed out.