Consumers feel pinch of monopoly pricing

The overwhelming majority of Maltese who took part in an EU-wide survey identified the gas, electricity and pharmaceutical sectors as the most problematic in terms of lack of competition, with higher prices being charged as a result.

The lack of competition in these sectors is bringing hardship upon Maltese families particularly through high prices and lack of choice, according to the results of the Eurobarometer survey published in Brussels yesterday.

The survey, carried out last November, shows the Maltese are very much in favour of a liberalised market and more competition. However, they highlighted lack of competition in certain sectors, particularly gas, electricity and possible “cartels” in the medicines area.

Asked to say what they felt was the most problematic sector in terms of lack of competition, almost 48 per cent mentioned the gas and electricity sector. This was followed by the provision of medicines (20.5 per cent) and public transport (9.3 per cent).

Asked to elaborate, particularly on what the main problems in the gas and electricity sector were, a staggering 79.7 per cent said prices were too high.

Another 25.5 per cent said there was no choice in the sector and consumers were constrained to use the only service provider available in the country, while 19.2 per cent said the impossibility of changing supplier was also a major problem.

Electricity in Malta is supplied through a monopoly operated by Enemalta Corporation. The state-owned company is responsible for the production and distribution of electricity, something which in other EU countries is not permitted.

Due to its small size, the EU granted Malta the possibility of having a monopoly in this area. In a few years’ time, Malta should have a new supply of energy through a submarine connection with Sicily that will connect the island to the European grid. However, this project is also being implemented by Enemalta, which will therefore consolidate its monopoly.

Until a few months ago, Enemalta was also responsible for the importation and distribution of gas. This has now been privatised although competition in this sector is still very limited.

For most of the Maltese respondents, medicines are also a big problem as many perceive a very low level of competition in this area. Almost 60 per cent of respondents said lack of competition was inflating prices while 25 per cent said there was no choice.

In a recent report, the European Commission identified the pharmaceutical sector as a problem area for Malta and mentioned the possibility of price arrangements between local importers of medicinal products. This was denied by the importers.

However, since the price of many medicinal products sold in Malta remains higher than in the rest of the EU, the government insisted prices must be lowered and entered into an agreement with importers that pushed down some of their prices.