Dusan Djapic is a member of the Inner structure of the Economic Council.
The Serbian market is characterized by the existence of a large number of state and private monopolies, which the state had created and which are judging by everything grounds for a serious antitrust policy. But in Serbia there is no political will to curb state violence over the economy. Therefore there is no desire to lead any kind of anti-monopoly policy. The competition protection authorities only by concentrating on one industry, shyly voice their opinion but without a specific epilogue.
Unlike a perfectly competitive market, imperfectly competitive markets where there is a dominant market share of one or several market participants, whether on the supply side (monopoly or oligopoly), or on the demand side (monopsony), lead to a loss of allocated social welfare.
Monopoly is a state in which there is one seller, complete inelasticity of demand, lack of substitution, complete restriction of the production mobility factor, lack of access of third-parties and total control over the sales volume and the prices. In practice there is almost no market with perfect competition, so we cannot assume that there isn’t a state of complete monopoly on the market.
Monopoly is a state in which there is one seller, complete inelasticity of demand, lack of substitution, complete restriction of the production mobility factor, lack of access of third-parties and total control over the sales volume and the prices. In practice there is almost no market with perfect competition, so we cannot assume that there isn’t a state of complete monopoly on the market.
It should be noted that the term monopoly is used in slang and that supply is concentrated on one or a small number of bidders. About how much the Serbian economy is monopolized can best be recognized by the HHI (Herfindahl-Hirschman) concentration index.
In 2000, before undertaking radical reforms of the economic system that should have led to a more efficient economy, the Serbian economy was highly monopolized, measured by the aforementioned index. Thus, energy was practically completely concentrated on the metal industry, and among industrial sectors in addition to energy and telecommunications high concentrations were recorded by the following fields: industry of non-metals and building materials, transport equipment industry, metallurgical complex, the main group in the chemical industry, food industry.
The reform of the economic system and privatization were to significantly improve the market structure and make the economy more efficient. But nine years later, the situation has only worsened, with about the same number of companies, and therefore a high degree of concentration in energy, telecommunications and the like. In practically nine years only one mobile operator was introduced, while fixed telephony remained at the level from 2000. In a large number of companies concentration increased because the privatization reduced the total number of bidders in a number of groups. In commerce, Serbia has a few large systems that had divided the market and which are deciding on the type, quantity, and price structure of procurement. Those systems were destroyed by the competition of smaller suppliers because wholesale is also in their hands. According to unofficial estimates, due to the existence of a monopoly, life in Serbia is more expensive by 20 to 30 percent.
Foreign companies seeking to enter our market are faced with a closed market and existing domestic companies, by trying to protect their positions, are preventing their penetration in every way. Domestic businessmen make agreements on a division of the market, about who will be placing products in which part of the market.
The government has so far not determined if there are monopolies in the state. Therefore, it doesn’t protect the law in force. The important failures of the new “anti-monopoly law” are still a highly placed border for a dominant position and lack of a clear definition of the relevant market in which competition is unfolding. Starting from the fact that the climate in Serbia is such that it is not conducive to getting in the way of political and economic powers, The Antimonopoly Commission will continue to stumble in the dark of inconsistent regulations.
Starting from the fact that the climate in Serbia is such that it is not conducive to getting in the way of political and economic powers, The Antimonopoly Commission will continue to stumble in the dark of inconsistent regulations.
The determination of monopolistic behavior and active protection of the competition are imperatives when it comes to adapting our economy with the economy of the European Union, with which Serbia, at least according to political rhetoric tends to be aligned. A large part of the legislation of the European Union is committed to protecting competition, because without competition, companies are forced to raise the level of operations and technology. Now that Serbia has to re-create and develop its industry, it is necessary to emulate the European Union and to use all the features in accordance with the rules of the WTO. Only with such policies can the state count on a healthy economy and healthy competition on the domestic market. In discussions of monopoly and oligopoly in Serbia is neglected the essence, and that is the way in which large commercial chains and foreign banks affect the real sector – the industry and agriculture. Foreign banks offer to its citizens only consumer and housing loans, whose rates of payment are 98 percent, while they are not interested in the reconstruction of the domestic industry. This directly hinders industrialization and actually encourages unemployment, which is among the highest in Europe.
The aim of the state should not necessarily be to prevent the abuse of the competition by adopting a strategy of industrialization of the country with new technologies. It means to protect domestic production, establish a Fund for crediting industry reconstruction and retaining a control package in a few commercial banks to be able to prevent oligopolistic behavior in the credit market.
