The government is proposing a law on exceptional price control measures (i.e., on price capping), and reading the comments from interested parties, it seems to me that there is not much room for accepting the proposal. The alternative is to abandon any price capping, but given that I know how capped prices were actually determined and how products were selected, it is unlikely that such a policy will be abandoned during the term of Prime Minister Andrej Plenković.
Now, we can debate whether capping the prices of seventy products is a good or bad policy, but it is what it is; it has its shortcomings, but, to be honest, there are arguments for the government implementing such measures. This law would allow the government to make decisions on price capping due to some crisis situation without having to issue decrees. In the discussion, a well-known organization that protects the interests of small retailers is rightly concerned for them, stating that ‘the measures prescribed by this law affect all retailers, but especially those smaller ones in smaller communities, who do not have significant bargaining power in the market, and therefore find it difficult to influence the formation of product prices.’
Market Dictate
I repeat, that is a reasonable stance, and it seems that it is understood in the Ministry of Economy as well, as it is noted below that the comment has been acknowledged. But what would happen if this proposal were accepted in the Croatian Parliament? Let’s imagine an ideal situation for small retailers – that they are exempt from this law. As already mentioned, these small retailers have less bargaining power in the market even under normal market conditions, and it is certain that a supplier would lower the price for a large retail chain before doing so for a neighborhood store or a chain of smaller neighborhood stores. If the ruling party decides to legally exempt smaller stores from price capping, I fear that in that case, nothing will help them or it will help very little. Because if they are a weaker competitor to large retail chains under normal conditions, then it does not seem to me that price capping will encourage customers to go to those small stores. However, if smaller retailers believe they should be exempt from this, I support them; we just need to see if that will be in accordance with constitutional principles, for example, with Article 49, paragraph 2 (the state ensures equal legal status for all entrepreneurs in the market).
However, in one comment, a supplement is proposed that I did not like: ‘A penalty should be prescribed for cases where a retailer does not have products with capped prices in their offer.’ It is good that this proposal, let the commentator not be offended, was not accepted. He wanted to protect consumers by fearing that small retailers would, for example, not sell bacon (now one of the seventy products with a capped price) in their stores because they would be at a loss with such a price. Although I appreciate the commentator, I do not know what would be achieved by this. We cannot go to extremes if it is not really necessary. If we assume that the policy of price capping is a good move (it will not last forever), then the goal should be to implement it with as little harm to entrepreneurs and retailers as possible, not to punish them further because they do not want to sell those products.
