Malta is a free market economy. Controls in place up to the election of May 1987 were dismantled by the new Nationalist administration. After 22 years of almost uninterrupted rule the free market should now be producing all the positive things attributed to it. Among them is a level of pricing that is not influenced by lack of competition.

The free market and competition are synonymous, especially when shored up with legislation aimed at dismantling monopolistic tendencies when they rear their ugly and damaging head. That notwithstanding, prices in Malta tend to be very sticky downwards. They also tend to be higher than in comparable economies. Inflation in Malta has remained persistently above the rest of the eurozone.

That pricked price advantages the adoption of the euro was to bring about. With Malta heavily reliant on the eurozone for its imports, there would not be exchange risks to distort prices. Besides, pricing in euro right across a very large zone would make prices easily comparable with those therein.

These advantages of the single currency area seem to work much less than perfectly in the local market. Measures adopted in the run-up to euro adoption to try to ensure that fair prices were maintained did do the trick for a while. True, there were those of who warned that, where justifiable price increases were suppressed, that only brought about pent-up inflation, with an explosion in the future when restraint ended and prices adjusted their prices to their proper levels.

That explosion happened, and worse. Not only were suppressed prices adjusted, but other prices seemed to go in a free-for-all. A broadly similar experience had happened when Malta joined the EU and customs duties on imports from the union were removed. The classic example concerned imported wine. The overall and individual price levels should have dropped quite significantly.

In fact they did, at the import, distribution and retail levels. But the drop was only briefly reflected in local restaurants. Today restaurants' wine prices are among the highest in the EU, like for like. And there is no justification, given that a bottle is not prepared in a kitchen. It is served with a minimum of fuss and uncorked in seconds.

The rise in the retail price index is attributed to the water and electricity surcharges and the further rise when the tariff system was introduced. That had a knock-on effect on the prices of goods and services. Still, stripped of that effect, prices remained stubbornly higher than expected.

That has induced strong reactions. Some call for a return to price control. The government says it will not resort to that again, though it warns that it could, if need be. It says so mostly with respect to medicines. For all that huffing and puffing, medicines continue to cost more than they do in some other countries. It is unlikely that the extent is attributable to the fact that the government is an aged debtor as far as suppliers of medicine to it are concerned.

There are those who call for a return of the pre-euro-adoption fair play mechanism. The government had indicated it would turn that into a permanent feature, but has failed to do so. The merry-go-round continues with controls and monopolies often being mentioned. That elicited a sharp reply from the president of Malta Chamber of Commerce, Enterprise and Industry in a letter to this news-paper (October 10). Competition, declared Helga Ellul, is the best form of effective "price monitoring". She cogently argued why, using free market logic to back up the case she made out.

She pointed out that "within the realities of today's market, where cut-throat competition emerges from every angle including the internet, it is inconceivable to suggest that local competing businesses will indulge in price abuse." The Malta Chamber, she said, reiterates its firm belief that it is only market forces and healthy competition which can regulate any imperfections.

Did that mean the market was working as it should? Not quite. The Malta Chamber, wrote its president, has been repeating forcefully that the Office for Fair Competition be adequately supported with resources that would permit effective market surveillance in order to ensure that a truly competitive environment prevails, as several bona fide businesses continue to face illicit competition from traders that did not comply with fiscal, environmental and other regulations.

In view of this rampant illicit trade, coupled with widespread (legal) parallel trade, Ms Ellul went on, it is inconceivable to suggest that a single firm or entity can enjoy monopolistic powers. The Chamber's position is also opposed to naming and shaming.

One of the reasons for artificially high prices, I believe, is that there is not enough market information to assist consumers. Another is that far too many consumers do not make effective use of their ability to shun retailers who are known to charge substantially more than competitors. The debate continues, as do high prices.