Criminal investigation launched into alleged bread cartel

  • 2010-08-19
  • TBT Staff

Estonia's bakeries are being investigated over a possible price fixing scheme.

TALLINN - The Estonian prosecutor's office has launched a criminal investigation into the possibility of a bread cartel following last week's comments by the Assiciation of Bakeries (AB) that prices will increase in the near future.

The prosecutor’s office said that the investigation is aimed at discovering whether “the members of  the Estonian Association of Bakeries have made agreements which verifies price and other trading terms for third parties.”

The AB said prices are expected to increase by 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."

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.

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.