Competition Council Under Intense Fire

Competition Council Under Intense Fire
Competition Council Under Intense Fire

The Competition Council is an officially ordained organization which keeps an eye on the movements of many domestically produced items. In recent months however the ombudsman has come under increasing criticism for its auto pricing policy. Auto producers and car buyers alike have criticized the organization for its decisions and pricing structures.

The Rouhani administration put the Competition Council in charge of car pricing less than two years ago; however, the formula to calculate car prices announced by the council has raised a chorus of criticism, Donya-e-Eqtesad daily reported on Monday.

Critics have lashed out at the council and severely criticized it for its failure in launching competition in the domestic auto market, the report says. Some even regard its presence and remarks about pricing as intrusive and unproductive. The critics, accordingly, have a craving to get the competition council eliminated from the auto market.

The council has been called on by the government to break up the duopoly of two major automotive producers, Iran Khodro and Saipa, Jamshid Pajooian, an economist and one of the founders of the council told the newspaper.  

Pajooian lamented the council's ineptitude in controlling car prices and went on to say the government doesn't help the situation by their inadequate support.

Another economist, Saied Laylaz, believes that the council does the complete opposite of what its title suggests. "The decisions made by this council are reminiscent of a command economy," he noted.

The council is unnecessarily meddling in the affairs of the auto industry, he added. "If the council is truly against duopoly, how come it doesn't do anything specific about the dominance of players in other domestic industries including telecommunication or steel?". He considered the council as the main culprit of dramatic losses that domestic automotive industries are suffering from.

Under the current situation, when supply surpasses demand and the market is saturated, no automotive company enjoys a monopoly and the council's interference just exacerbates the situation, an automotive expert said. He also criticized the council's meddling in car pricing, which in his opinion is a delicate process.

On the council's extreme sensitivity around the auto market, Reza Shiva, the head of the competition council said that their sensitivity is due to the importance of the automobile as a basic good in Iranian the households'.

He believes that the council merely devises the car pricing formula and sends it to the National Iranian Competition Center and the calculations are done by them. He added that car manufacturers criticize the council because the set prices are not in their favor.

He underlined that the council tries its best to supervise and regulate the auto market and to make it competitive.

"To make the market more competitive, it is vital to reduce tariffs on imported cars and attract domestic as well as foreign investors," he said. "The ratio of demand and supply does not have a high impact on setting car prices in the current auto market and the council seeks to set fair and exact prices considering the rights of both manufacturers and customers," he added

Unlike other countries, Iran’s auto industry is highly dependent on resources of banks, which attract a large amount of liquidity.

Increasing imports and making the auto industry the third national production center after oil and gas industries are appropriate strategies for boosting the industry.

Car imports should help improve competitiveness, as the domestic auto industry increases its quality and customers get more options to choose from.