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Gov’t tightens grip on discount chains accused of fueling inflation via steep price increases

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A new regulation targeting Turkey’s discount chains, which have been accused of helping to stoke inflation by means of steep price increases, requires them to send data on their branches and products to a system determined by the Ministry of Trade, local media reported on Wednesday.

Turkish President Recep Tayyip Erdoğan frequently claims that discount chains have been increasing prices while costs remain stable in a move that he said was fueling the fastest pace of inflation in more than two decades.

Turkey’s inflation, which has risen steadily since reaching a low of 16.6 percent in May 2021, was 84.39 percent in November, according to official data.

Erdoğan’s far-right ally, Nationalist Movement Party (MHP) leader Devlet Bahçeli, also accused discount chains of helping to stoke inflation in addition to affiliation with terrorism in late November.

According to a decision signed by Erdoğan and published in the Official Gazette on Wednesday, discount chains with over 200 branches are responsible for transferring data on their branches and products to the Trade Ministry’s system in order to “develop policies for conducting retail trade in accordance with effective and sustainable competition conditions” and “inform the public and enable the consumer to make price comparisons.”

“These data can be shared with the relevant institutions, organizations and the public. The procedures and principles of data transfer are determined by the ministry and notified to the relevant chain stores,” the decision said.

Representatives from several companies presented a verbal defense on Tuesday as part of an investigation conducted by the Turkish Competition Authority into five discount chains and their 15 suppliers on allegations that they violated Law No. 4054 on the Protection of Competition, BBC Turkish service reported on Wednesday.

At the meeting the defense delegation concluded that the stores violated the law, stating in a report, however, that the companies were previously fined for similar violations and there was no need to impose a new fine due to the right not to be punished twice for the same offense, BBC said.

They were referring to a fine of some TL 2.6 billion ($139.5 million) in total that was imposed by Turkey’s Competition Authority on retail giants Migros, Carrefour, BİM, ŞOK and A101 and supplier Savola Gıda last year, as a result of investigations launched in March 2019 to determine if they were engaged in the unfair competition.

The defense delegation demanded administrative fines for 14 suppliers, BBC said, adding that the defenses of the companies will be completed on Wednesday and that the final decision was expected to be announced within the next 15 days.

Meanwhile, retail giants’ branches across the country, including some in Ağrı, Konya, Batman, Sakarya and Van provinces, were inspected by municipal police officers who were ordered to notify the relevant authorities in the event that they detect a business gaining unfair profit by way of high prices, according to Turkish media reports.

Local media reports also said five such branches were closed down in Ağrı on Tuesday as a result of the inspections and on the grounds that they submitted incomplete documents, thereby increasing the number of closed branches in the province since Dec. 3 to 10.

Galip Aykaç, chief operating officer of BİM, previously replied to Bahçeli’s claims, saying discount chains were the cornerstones of Turkey and that the people behind the allegations weren’t strong enough to move them.

After his remarks sparked a harsh statement by MHP Vice Chairman Semih Yalçın and mafia leader Kürşad Yılmaz, known for being close to Bahçeli, threatened to kill him, Aykaç quit as chairman and board member of the Food Retailers Association and apologized to Bahçeli for his statements.

Erdoğan has frequently accused discount chains of increasing prices without a valid reason, while the pro-government media has portrayed them as actors in a battle to overthrow the president.

Up for re-election in June 2023, Erdoğan has championed an economic model that prioritizes exports, production and employment at the expense of price stability and the currency, pressuring the central bank to lower its benchmark interest rate into single digits, a goal it met last week by bringing the key rate down to 9 percent.

A plunge in the lira, which lost 44 percent of its value against the dollar last year and another 29 percent since the beginning of 2022, because of his unconventional policies is among the reasons for the high inflation.

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