No Gentlemen Left in The Market

Development minister's proposal to reinstate voluntary price-control deal is dead on arrival as a consumer protection group gears up for a September 3 shopping boycott

By Kathy Tzilivakis, Athens News

THE GOVERNMENT hit rock bottom in its attempt to cajole industry and retailers into voluntary price-control agreements.

In a string of meetings with Development Minister Akis Tsochadzopoulos, held on August 27-28, business associations reportedly rejected such "gentlemen's agreements", saying they were not compatible with a market economy.

Businesses blamed increased production costs, utility charges and excessive taxation for any eventual price hikes that have emerged since the introduction of the euro last January.

Tsochadzopoulos is reportedly turning to measures which will lower prices in the long run. Contrary to Economy and Finance Minister Nikos Christodoulakis, who had warned that profiteering businesses would be publicly blacklisted, Tsochadzopoulos endorsed so-called white lists naming businesses adopting moderate price policies.

According to daily Naftemporiki, Tsochadzopoulos is also considering mandatory use of invoices in agricultural produce wholesales in order to better keep track of price developments; the installation of an electronic data bank at the ministry's Price Observatory; the launch of information campaigns instructing the public that "every cent counts"; and an investigation by the Competition Commission, Greece's fair market practices watchdog, into possible cartel formation in the markets for bottled water and fuel.

Furthermore, a new bill to increase the power of consumer organisations, notably their right to launch class-action suits against companies, is in the works.

Preparations for consumption boycott

Meanwhile, consumer protection group INKA is gearing up for the nationwide consumption boycott it has declared for September 3 that will cover every retail activity including services at hairdressers' and restaurants.

INKA, however, has not advertised the boycott in newspapers or on TV and radio. "Even if we had the money to do something like that, we wouldn't. It's a principle not to buy air time," the group's chairman Charalambos Kouris told the Athens News.

Instead, INKA relies on posters and leaflets volunteers are to distribute hand in hand as well as on media exposure. Kouris declined to indicate a yardstick against which to measure the boycott's success. "What's important is that every Greek region participates," he says.

Inflation, the monster to beat

The government's sense of urgency on the issue is heightened by the fact that inflation, fuelled by higher prices, is holding up.

"Inflation seems to be persisting," Christodoulakis said on August 29 after news emerged that August inflation figures will remain at their July level of a 3.3 percent year-on-year increase.

Inflation usually budges in August as the summer sales period drives prices lower. Come September, however, companies mark their prices upward. The government reportedly fears this could ignite inflation even further later in the year. Analysts, however, expect inflation to fall by next January as "base effects" (ie the effect of comparing the figures of one period with exceptionally low or high figures of the corresponding period in the previous year) are expected to be favourable.

Meanwhile, umbrella trade union GSEE invited employers and the government to talks on combating price hikes. Massive and concerted price increases reduce consumers' choice and competition fails to heal the situation, GSEE says in an August 28 press release.