Bread cartel suspected

  • 2010-08-18
  • From wire reports

ROUTINE WORK: The Competition Board will begin looking into reports of price increases.

TALLINN - The Estonian Association of Bakeries reported that it is likely that the price of bread and other bakery products are likely to rise in the near future, reports Postimees Online. The bakers’ organization explained that for years bread prices have been kept stable solely by cutting labor costs. Producers of bread estimate that the price growth will most probably range from 10 to 20 percent.

“In the past few years the price of bread has not risen, despite the growing production costs caused by the increases in excise tax rates on fuel and electricity and the surge in the VAT rate,” stated the Association of Bakeries.

Managing director Arnold Kimber stated that after the likely growth in the price of flour, the price increase in bread and other bakery products will unfortunately be inevitable. “If the mills will raise the price of flour, there will be no other recourse - bakeries will also have to raise prices,” emphasized Kimber.

He noted that although the growing prices will be “inconvenient” for consumers, there is something positive in it as well. “There is a long-term tradition of baking and eating rye bread and the price growth will guarantee that the tradition will be maintained,” explained Kimber.
The competition board sees something more sinister behind all this logic. The board is considering launching an investigation in order to find possible agreements between bakeries, colluding to raise the price of bread, writes National Broadcasting.

“Whenever the press publishes questionable materials, we analyze such allegations,” said the Director General of the Competition Board Mart Ots. He remarked, however, that he has not yet given orders to initiate proceedings.
Ots explained that the situation ought to become clearer by the end of the week and it would be too early to comment on it beforehand. At the same time, he emphasized that there is nothing remarkable in analyzing the plans to raise prices. “The Competition Board undertakes analyses on the basis of information published in the press on a weekly basis,” he pointed out.

Director of the Institute of Economic Research Marje Josing, however, asserted that the increasing price of grain is only a pretext for bakeries to raise prices - flour only accounts for ten percent of the price of bread. She stated that the entrepreneurs’ conviction that ‘the time is ripe to raise prices” is a much more weighty factor in the price growth.

More than 80 tons of nearly 70 different varieties of rye bread is produced in Estonia each day, reports the Association of Bakeries.