My daily Bread & Milk: OECD’s Myth of “Competition Toolkit & lower prices for consumers”

Hurrah! The milk and bread market in Greece is to be liberated! The much anticipated liberation has been pushed forward by the Troika lenders since the first bailout agreement in 2010. The OECD had provided its famous Competition Assessment Tollkit for this. But although the previous Greek governments had passed the relevant laws and had implemented them half-hearten or managed last  minute modifications, it  is now the turn of left-wing SYRIZA to fully liberate the market: bread will be allowed to be sold everywhere, “fresh” milk can be 11 days old – in the name of competitiveness, of course. Not for the sake of consumers but for the sake of the businesses – mainly located in Central and North Europe – selling tones of frozen bread dough and milk and eager to enter the Greek market.

Bread

In the 3 bailout bill to be voted on Thursday, the new provisions for bread read:

“There will be no distinction for Bakery (Φούρνος) and Bread Outlet (πρατήριο άρτου).

On the grounds that the distinction between the two creates confusion among consumers, bread outlets that have the necessary facilities to complete bake of bread dough will be allowed to make use of the name description “bakery”.

Traditional bakeries that prepare bread on their own and sell it ready baked, will have the possibility to stress this with additional signs.

As for the selling points of bread, with modifications of  Law 3526/2007  limitations will be lifted, and bread will be also available to be sold at: fish-, meat- and poultry- shops, groceries, or shops selling liquor.”

The measure to sell bread at businesses that are not ‘bakeries’ has angered Greece’s bakers and Bakers’ Guild President Mixalis Moysios told news website NewsIt:

“This is an unacceptable provision. What is happening is unacceptable. They tried it once again with Hatzidakis [Development Minister in 2012], now it’s the SRYIZA-ANEL government.

They managed to allow the sale of bread even at the hairdresser’s  and at the garage. This proves that the 20 hours of prime minister in Brussels and 17 hours of trading at the Hilton were big fiasco. This has never happened before. They destroy our industry with that measure and therefore this is inadmissible. It is something for which we intend to respond. “

Milk

In the same bailout, the milk market will be liberated as well, and the duration of ‘fresh milk’ will be extended from 5 days currently to 10-11 days.

Milk producing companies in Central and North Europe have already started to rev up their motors and trucks loaded with not so fresh milk are ready to roll southwards and enter the Greek market.

OECD and its Competition Toolkit

I remember that in 2013, the same OECB Competition toolkit had passed by the Greek parliament, and fresh milk duration rose from 3 to 5 days, no price decrease was notice by consumers.

The same happened to bread, with the provision regulating that bread had to be sold by weight and not by piece. A loaf of Greeks’ favorite white bread is 300-350gr and is sold at 0.70-0.80 euro. Ι never saw a baker weighting the bread though…

According to romantic and out of this world OECD:

“The increased competition can improve a country’s economic performance, open business opportunities to its citizens and reduce the cost of goods and services throughout the economy. But numerous laws and regulations restrict competition in the marketplace. Many go further than necessary to achieve their policy objectives.

The OECD’s Competition Assessment Toolkit helps governments to eliminate barriers to competition by providing a method for identifying unnecessary restraints on market activities and developing alternative, less restrictive measures that still achieve government policy objectives.”

In its 2013 Competition Assessment Review for Greece, the OECD had identified 555 problematic regulations and 329 provision in four key sectors of Greek economy: food processing, retail trade, construction material and tourism. These 555 and 329 ‘problems’ would need “changes in order to foster competition.”

Among others, the OECD calculated the benefits of the changes in these problematic areas as follows:

“Although it was not possible to quantify all the benefits arising from enhanced competition, OECD calculations estimate the total effect from rising expenditure, increased turnover and lower prices for the Greek consumer at around EUR 5.2 billion annually, or about 2.5% of GDP.

The benefits of reform in this area are sizeable!”

So far the benefits of OECD’s reforms in bread and milk for the consumers have been “zero-able” and what is expected as development is lowering the quality of bread and milk.

For the understanding of OECD, the bakery and the bread outlet was a linguistic problem confusing the consumers. The problem was apparently for the OECD though and not for Greeks who love their white bread and have known already since 2008 or 2009 – I don’t remember exactly – that bread baked and sold in bread outlets was made of frozen dough coming from Bulgaria or China. And it was not cheaper either.

And all these, long before the OECD discovered Greece on the map.

A notice should be made on opening of the Taxi-drivers & licenses profession: more players came into Greece and with the exception of Uber, all other taxi companies have the same prices being regulated by the state.

Next on 3. bailout are: generics & tourism – yes, in tourism where the creditors raised the Value Added Tax, making it noncompetitive in the Mediterranean Sea basin.

It’s time that the OECD halts the ‘fairy tale’ of competition and cheaper prices for consumers, and admits the petty interest it represents. or even better: reconsider its methods.

PS I think I’ll get an old car and start selling bread, OECD’s milk and generics across Greece – 11 days per month. The milk will still be fresh and so will the frozen gum-dough bread.