The Anti monopoly committee of Ukraine accepted an illegal and short-sighted decision
The Anti monopoly committee of Ukraine fined the Association “Mebliderevprom” and its 14 members for UAH 419 mln because of agreed anti-competitive actions which concern misrepresented results of auctions.
This fine is not appropriate and cannot be paid because in some cases it exceeds the value of the enterprises. This may lead to bankruptcy of important wood processing enterprises and collapse of furniture production industry in Ukraine and dismissal of approximately 10,000 employees in this area of business.
Anti monopoly committee of Ukraine accuses wood processing enterprises of agreed anti-competitive actions which concern misrepresented results of auctions. However, the situation on the market showed the opposite. The average prices for wood increased from 37% to 68% depending on the kind of raw materials in 2011. The increase of prices and reduction of raw materials volume for auction was observed in 2011.
It is worthwhile to note that all wood processing enterprises buy raw materials from “Derzhlisagenstvo” (State woods reserves agency), that is why volume reduction of raw materials offered for auctions indicates that “Derzhlisagenstvo” was trying to create artificially the deficit for increasing demand and prices increase reasoning. At the auctions in the 2nd quarter in 2011 raw materials for production and boards were offered in the volume of 450,000 meter cubic, that is less by 230,000 meter cubic than in the 1st quarter of the current year and twice lower than the demand of the boards factories and enterprises.
Over the past years the trends for export increase of unprocessed wood have been observed. In 2010, 2.9 mln meter cubic of unprocessed wood was exported which is by 56% more than previous year and it was by 30% more in 2011.
Besides, “Derzhlisagenstvo” has its own enterprises which do not participate in auctions.
Essential changes have taken places since the Anti monopoly committee of Ukraine checks at the market of unprocessed wood.
The market current situation leads to following consequences:
- Boards and veneer production enterprises have been forced to reduce their production by 10-20% for chipboard and by 10% for veneer this year.
- There has been significant decrease of demand in the last quarter this year in comparison with the last quarter previous year. It caused chipboard sales decrease by 20% and veneer by 10% respectively. Consequently, wood processing and furniture enterprises are overwhelmed with ready products.
- Along with significant demand decrease for wood processing production, there is prices increase for materials.
This year the cost of tar has risen by 12%, the cost of gas has risen by 37%, the cost of electricity has risen by 9%.
All these result in further reduction of wood processing enterprises’ competition and profitability.
However, the Anti monopoly committee of Ukraine didn’t consider above-mentioned factors, also crisis in the market of wooden materials, difficult financial and economic position of enterprises in wood industry of Ukraine, the auctions objective indicators of unprocessed wood and fined wood processing enterprises.