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12° Nicosia,
21 May, 2024
 
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What's wrong with a little transparency?

The e-kalathi shopping platform has been creating a buzz lately with its real time product price comparisons

Maria Eracleous

Maria Eracleous

There has been a lot of buzz surrounding e-kalathi in recent days. It is an electronic platform that aims to provide consumers with real-time updates on the prices of products in supermarkets, enabling them to easily find the best deals on their preferred products. The proposal has already passed through the Ministry and is now headed for submission to Parliament. However, given the strong disagreements raised by the involved parties, it is expected that the discussion in Parliament will be intense.

The basic disagreement lies in the fact that competition is already functioning at a very high level in the supermarket sector, and the implementation of such a measure would constitute state intervention and distortions in competition. It should be explained to us in what way this measure will cause distortions, which of course is not considered to solve the problem of inflation. However, it is a tool that allows for direct price comparison between supermarkets. That is, instead of the consumer checking the leaflets of each supermarket one by one, they would enter an application and be informed about the cost of their basket in the nearest supermarkets. It is probably a tool that enhances transparency. Why should this be a problem?

Could it be considered an issue for smaller businesses, which do not have the convenience of larger supermarkets, in terms of product pricing? These are businesses with an annual turnover of 2 million euros, which were included in the draft law with new regulations. However, after objections were raised that small businesses were being left out, the law may end up being unfair to them. Ultimately, who will be affected by this measure and what distortions could it cause in the industry?

While acknowledging that the measure did not work effectively in Greece as consumers appeared to not utilize it, they simultaneously argue that it should still be an option for those who want to use it. Ultimately, the question that arises is why should transparency be a concern for anyone.

On the flip side, there is an opposing view that suggests this particular measure is fragmented, and can only be effective if accompanied by the simultaneous and combined use of the "Household Basket" tool, which consists of products from 50 different categories, offered at low prices. Although attempts were made to implement this measure in the past, they were unsuccessful. However, similar disagreements and reactions were voiced at that time, including concerns about competition distortion and the redundancy of the measure, given the abundance of product offerings available. Consequently, the "Household Basket" tool was not put into effect, and now, its implementation is deemed necessary for the proper execution of the current measure. Despite the same disagreements arising then and now, nothing has changed in the interim.

The focus of the discussion is a measure that is unlikely to result in a reduction in product prices. What should be of greater concern to consumers is whether the government will eventually apply the reduction in VAT on essential items, a measure that was possible to implement last year based on EU directives. However, it was not implemented, and the issue was passed on to the new administration. Ultimately, no significant decision has been made to ease the burden of retail food costs. Nonetheless, there is good news for consumers as prices are rising at a slower pace. While they are not decreasing or stabilizing, they are simply increasing at a reduced rate. Therefore, everything is under control.

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