Hot Cuppa

These days I am participating in a quite interesting workshop on the governance of transition held by Vienna Institute for International Economics and Joint Vienna Institute (The local agent of IMF).

A session in the workshop was devoted to competition policies and the role of supervisory institutions such as competition authorities. These authorities are to monitor the issues like mergers and market power and should prevent the actions which lead to the monopolistic position of a firm in the market. Of course such an important decision can not be made solely by a bureaucratic body and has to be addressed by a legal entity which is the "cartel count" in this case. The competition authority opens a case against the companies who are accused to violate competitive structure of the market and then the court will judge among the two parties based on the reports of the authorities and defends of the company.

We discussed the theoretical bases and some practical cases and at the end the lecturer asked the participants whether their country lacks an established competition policy? I was the only one who raised the hand. However I added that some years ago the anti trust regulation were studied in the IRPD (the Moassese) but has not been discussed in the parliament up to now. Obviously the political economy of the story is the main obstacle because should the antitrust regulation be in place the government has to leave its monopolistic position in many industries e.g. communication, sugar, tobacco and to some extend in banking, insurance, air crafting and steel. Losing the monopoly power brings lots of consequences for the government including missing of the chance of direct control over the market, financial resources coming from the companies and many money making job positions which could be gifted to its supporters.

Such a "conflict of interests" usually works very strongly to stop any government in Iran , no matter conservative or reformist, to run serious competition, privatization and market liberalization policies. I never forget the moment when a highly influential senior economic manager in Khatami's administration, who is still in power, told me that even if in theory we would support the mass privatization programmes and antitrust ideas but in practice we are reluctant to do so as we will lose our power.