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Annual Report 2009

Annual Report 2009 Annual Report 2009

 

Dear reader

2009 was an extraordinary year for all of us. We all know from theory that economy is cyclical and every boom is followed by a recession. Hence it was natural that the 10-year economic growth in Estonia should one day be hit by a backlash but nobody in their worst dreams expected a backlash as vicious, with a 14% decline in economy. By mere chance, the downward trend in Estonian economy coincided with the global economic crisis. However, already in 2009 the first optimistic signs started to show in the deepest economic crisis. By now there is no doubt that the recession will be replaced by new growth and that our economy will emerge stronger than ever. We remember well how the whole economy went into depression after Lehman Brother’s bankruptcy and some prophets said that the global financial system would completely disappear. Some even recommended to change all one’s property to gold and then bury it in a pot. However, already in the second half-year of 2009 the first positive signals about the recovery of global economy started to arrive. Still, 2009 will most certainly be remembered as the year of the deepest economic crisis since the 1930s.

We may ask what is the impact of the economic crisis on competition. Lower inflation and the resulting price decline are certainly beneficial for the consumers. The tighter economic conditions should have a positive impact on the general competition and efficiency growth. The number of concentration applications submitted to the Competition Authority is a good indicator of the general economic situation. The number of applications submitted in both 2006 and 2007 was 34, in 2008 – 27, and in 2009 only 17.
It has been discussed extensively whether companies are more prone to making cartel agreements during an economic recession period. The number of investigations initiated by the Competition Authority (10 cases since 2008) may suggest that it is so. However, it is more probable that the figure is not so much related to the economic downturn but to our more vigorous fight against cartels.

In 2009 we were also more active in analysing various market barriers and deviations in the competitive situation. A suggestion to liberalise the overcounter sales of pharmaceuticals is probably the most outstanding among them. As a result, a discussion developed in the media, comparing the hazardousness of paracetamol and a chemical drain cleaner. Surely it is equally dangerous to take an overdose of a drug or to swallow a domestic cleaner but selling chemical cleaners in shops is allowed. The dangerousness of pharmaceuticals is one of the main arguments why overcounter drugs have not been released into the retail network. Though the liberalisation of retail market has not progressed, the question has been raised and hopefully we can also see some progress.