By Vesna Peric Zimonjic
BELGRADE, Dec 13 2007 (IPS)

So what did you pay for it? Before they knew it, that question was no more the usual small talk among Serbs.

They have discovered they pay up to three times more than shoppers in the richest European countries for some goods, and at least 20 percent more for basic food than friends or relatives in neighbouring Bosnia, Croatia or Montenegro.

The average salary in Serbia is 500 dollars a month, compared to almost 1,000 dollars in Croatia. But Croats pay 1.18 dollars a litre of milk, and Serbs 1.48 dollars. So with cheese, yogurt and other milk products. And, Serbs pay three times what Germans pay for a packet of diapers.

“We live under monopolies of the powerful,” business analyst Dragan Krstic told IPS. “They are now being protected by laws, which do not stimulate competition.”

Serbia has taken to hasty and not always transparent privatisation over the past seven years since the fall of the isolationist regime of Slobodan Milosevic. Many local firms bought retail chains, agriculture production facilities or arable land. The firms belong mostly to tycoons who got rich in Milosevic’s era of the 1990s.

The few tycoons behind these firms took on foreign sounding names, or registered their companies abroad. They also took up agencies for import of popular foreign brands.

“We now have one importer and two or three large retailing chains, so they all build the price up,” Petar Bogosavljevic from the Movement for Protection of Consumers told reporters. “Such a monopoly enables them to define the gross margin, which in turn gives them astronomical profits.”

The Movement recently called on Serbs not to buy milk for four days to “punish” a monopolist who bought almost all dairies in Serbia and “shamelessly dictates the prices.” There are no statistics on how consumers responded.

“Any gross margin that exceeds eight percent is considered indecent abroad,” Miroslav Prokopijevic from the independent Centre for Free Market told IPS. “We found out that here for some imported fashion goods it goes up to 45 percent.”

Prokopijevic says the state has failed to create either the right atmosphere for a competitive market economy, or regulation to protect consumers.

Some of the laws date back to the pre-Milosevic era, like the 40 percent tax on imported cars. This was intended to protect the local Zastava car factory that had partnership with the Italian Fiat. The company went down in the 1990s under the force of sanctions. Sanctions were lifted seven years ago, but the law was never abolished.

Now even pro-government media has begun to criticise the high prices. Ljiljana Smajlovic, editor in chief of pro-government daily Politika, wrote a column under the title ‘Pressure and Torture’ that a tycoon had called her paper and her reporters repeatedly to object to their attitude “towards his empire.”

It is also well known that the tycoon tried to block entrance of French, German, Slovenian and Italian mega-stores in order to preserve the monopoly of his stores that operate under different names. He failed in the attempt, but still has more than 30 percent of Belgrade’s retail and food market share.

The European Bank for Reconstruction and Development noted the “monopoly of some companies” in Serbia in its 2007 Transition Report, rating its progress as lowest in the region. It called for broader establishment of European Union (EU) standards and rules for a free market.

The state holds its own monopoly, in oil refining and imports, power, and air transport.

The government does not look like it is easing up on taxes either. “One should not be tricked into believing that things are simple,” Milan Prostran from the Chamber of Commerce told reporters. “Apart from VAT (value added tax, 18 percent in Serbia), the state does not want to give up on hefty taxes and customs that generously fill its coffers every day.”

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