Irakli Kobakhidze has said the government will actively engage with distribution companies and retail chains to reduce consumer prices and will use antitrust mechanisms if necessary.
In a video address on food prices, the Prime Minister stated that the government is prepared to hold direct consultations with market players to secure price reductions for citizens.
“We will actively engage with representatives of distribution companies and market chains to achieve price reductions for our fellow citizens. If necessary, we will also utilise antitrust mechanisms that have proven effective in various countries,” Kobakhidze said.
He also called on law enforcement agencies to conduct a comprehensive investigation into pricing practices and requested that the Georgian Parliament establish a parliamentary commission to examine the issue using oversight mechanisms.
Kobakhidze stressed that the price disparity between Georgia and Europe is significant, citing comparative data on identical international brand products.
“When comparing prices in Georgia and France, sunflower oil is 34% more expensive in Georgia, pasta 97% more, rice 180% more, butter 30% more, cheese 42% more, and chocolate 47% more,” the Prime Minister said.
Head of Government claimed that this difference is largely driven by high mark-ups imposed by distributors and supermarkets, which average around 86% from the Georgian border to the checkout.
He noted that public concern over high food prices prompted an in-depth analysis of basic products, trading practices, and mark-up structures of chain supermarkets.
The Prime Minister further stated that net profit margins of some retail chains in Georgia range from 7% to 14%, compared to an average of around 2% in Europe, despite significantly higher operating costs for supermarkets in EU countries. Distribution companies in Georgia, he added, also maintain high net profit margins of 6% to 13.5%.
Kobakhidze claimed that the financial pressure placed on suppliers is so severe that Georgian producers often find it more profitable to export their products abroad rather than sell them in domestic supermarkets.
“This leads to a paradox where Georgian supermarkets sell foreign products that were actually exported by Georgian companies. This is a serious problem, as the state’s priority should be to support domestic production and reduce imports,” he said.
The Prime Minister also pointed to the rapid expansion of retail chains, noting that the number of chain supermarkets in Georgia has doubled over the past five years. Georgia now has 113 supermarkets per 100,000 people, compared to 45 in Germany and 62 in Austria.
Kobakhidze said preliminary analyses indicate several contributing factors to high prices, including network cashback schemes, entrance fees for shelf space, delayed payments to suppliers, expansion costs reflected in prices, and potential cartel-like coordination among market players.
“These practices raise serious suspicions that market participants may be acting in concert, which requires further analysis,” the Prime Minister concluded.
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