Economist Akaki Tsomaia sharply criticized Prime Minister Irakli Kobakhidze’s recent claims that high food prices in Georgia are caused by excessive markups imposed by distribution companies and retail chains. Kobakhidze had instructed law-enforcement agencies to investigate whether criminal activity, including cartel agreements, may be contributing to price increases. Tsomaia argues that the scenario described by Kobakhidze is technically impossible in a competitive market.
According to Tsomaia, if retailers were continually increasing profit margins, as Kobakhidze suggests, new competitors would naturally enter the market and sell products at lower markups. He noted that basic food items like rice or pasta require no sophisticated production, meaning any artificially inflated profit margin would immediately attract new market players. The economist said that only one explanation remains for sustained margin growth: systemic barriers or corruption involving both businesses and the government.
Tsomaia stressed that if the government cannot provide an alternative rationale, Kobakhidze’s own logic points to corruption between state authorities and suppliers. “If no other reason can be found, then not only the so-called ‘mafia businesses,’ but everyone, from the Competition Agency to the prime minister, should be arrested,” he wrote. He added that the prime minister’s call for criminal investigations could turn into intimidation of the private sector.
The economist warned that sending police into wholesale and retail companies to examine pricing decisions amounts to “business terror” and reflects the true nature of the regime. He criticized plans to form a parliamentary investigative commission in 2026, arguing that such political oversight of pricing processes undermines market principles. “By staying silent, you are only empowering and assisting this system,” Tsomaia concluded.
