Farsons CEO takes issue with finance minister’s ‘cartel’ stab at big business

The CEO of Farsons, one of Malta’s largest beverage and beer producers and importers, has called out “concerning generalisations” made by finance minister Clyde Caruana over Malta’s market being dominated by ‘cartels’.

Norman Aquilina said that Caruana’s assertions that a lack of competition in Maltese markets were the result of cartel behaviour between major players, appeared to tie in with other political references towards big business being automatically associated with anti-competitive practices.

He was referring to recent statements by Labour MEP Alex Agius Saliba, who asked the European Commission to probe local food importers, who he suspects are colluding to bump up food prices, with accusations of market collusion.

“Such claims are clouding-up the distinction between being dominant as opposed to being loosely tagged as a cartel, and likewise, between making a legitimate profit as opposed to profiteering,” said Norman Aquilina.

“But why this vilification, skepticism and distrust towards big business? Maybe, considering the prevailing cost of living pressures it is not too surprising to hear such populist conspiracy theories.”

Aquilina said sweeping assertions had to be placed in a proper perspective. “There is a dire need to rectify this growing obscure view of diabolically depicting big business as a ruthless profiteering breed.”

While he said not all big business might be right or pure, it was incorrect to automatically associate big business with cartels or any form of abuse of power, he said. “Just as competition law experts will tell you, being dominant does not render a business anti-competitive, it is any resultant abuse of its dominant position that would,” Aquilina said.

“Many big businesses remain exemplary in their ways of working and values they uphold and practice. Even if realistically size remains a consideration of influence, it certainly does not determine the legitimacy or otherwise of a business. It is how it operates, sets and attains its corporate goals that distinguishes on which side of the fence a business stands.”

Finance minister Clyde Caruana, who on Monday presents his Budget to the House of Representatives, told a Times of Malta business breakfast that competition in Malta was based on oligopolies which he dubbed ‘cartels’.

“If you had to look at each and every sector, the providers and suppliers are at best three or four. Whether it’s banking, telephony, whatever – it’s made up of cartels, there aren’t too many suppliers,” the minister said.

Cartels are illegal, anti-competitive arrangements between two or more independent operators that seek to control supply or prices, by fixing prices, or cap the supply of goods to the market.

Caruana implied that cartels thrive in smaller markets, where it is easier to seize a commanding share of a market. “When you have markets which are small, intrinsically there’s going to be a problem with respect to competition. We see it in all markets and it’s very difficult to address that,” he said.

Caruana said that Malta’s problems with price inflation was also down to “an element of greed inflation. Even ECB president Lagarde said there are signs of that across member states, so we don’t stand out,” the minister said. “Given that competition is what it is in our market, one would expect a higher degree of such elements.”