Mobile Imports Limited to Four Firms; Competition Under Special Privileges

An Audit Court report on the registration of a $96 million mobile phone import order has once again brought attention to the transparency of import quota allocation and the consequences of market concentration in the mobile phone sector.

According to Mehr's reporter, the Court of Accounts has announced the existence of a mechanism in the Ministry of Industry, Mines and Trade, which has provided the basis for the concentration of mobile phone imports in the hands of four specific companies since 1403. According to this organization, applying exceptions without clear criteria has caused discrimination among importers and contradicted the principle of competition.

According to the report of the court, in one of the cases, custom registration worth more than 96 million dollars, equivalent to more than a quarter of the allowed quota, was done without observing the legal limit and without including the product's eight-digit identifier and base code. The basis of this action is the commitment to build an agricultural and industrial complex; While the investigations of the court have shown that the mentioned project has not made any physical progress. This institution has announced that it will pursue the reform of the relevant mechanisms through the legal path.

From administrative exception to economic privilege

The importance of this case is that the mobile phone import license, in the conditions of currency and trade restrictions, is not just an administrative process; Rather, it determines access to a multi-billion dollar market. Any company that can register orders more quickly, receive more quota or deliver the goods to the country sooner, will have an economic advantage.

If access to these opportunities is not based on clear and uniform criteria, companies receiving exemptions may have a significant advantage over other importers. In such a situation, the competition changes from the path of cost reduction, service improvement and diverse product supply to the competition for access to licenses and administrative privileges.

The order of 96 million dollars is also important from the same point of view. The issue is not only the size of the figure; The issue is how such a capacity was allocated outside the declared ceiling and why the commitment to invest in a project without physical development is the basis for enjoying this privilege.

How does monopoly affect the price of mobile phones?

The first possible consequence of import concentration is the reduction of competitive pressure on large importers. As the number of effective market players decreases and the entry of new competitors becomes more difficult, the incentive for price competition can decrease. In this situation, the consumer may face more limited choices, fewer discounts, or a greater price difference between the cost price and the supply price.

Of course, market concentration alone does not prove that firms colluded or intentionally kept prices high, however, the non-transparent allocation of concessions can lead to a less competitive market.

The second consequence is the possibility of supply disruption. When a large portion of imports are held by a limited number of companies, delays in placing orders, providing currency, clearance or supply by these companies can have a wider impact on the market. When a large part of imports is held by a limited number of companies, delays in order registration, currency provision, clearance or supply by these companies can have a wider effect on the market, on the other hand, the presence of multiple importers can enable faster replacement of suppliers.

The experience of the mobile market in 1404 also shows the importance of this issue. According to customs statistics, about 8.4 million mobile phones worth 1.6 billion dollars entered the country through the commercial route; While these figures reached about 11.4 million devices and 2.48 billion dollars in 1403. Therefore, commercial imports in 1404 decreased by 26% in terms of number.

This reduction cannot be directly attributed to the recent Court of Accounts case; Because several factors, including currency restrictions, order registration process and business conditions, affect imports. However, the decrease in imports along with the report of the concentration of points highlights the necessity of a closer examination of the distribution of quotas and its effects on competition.

the final cost of rent; From importer to consumer

Opaque ratings can create costs that are partially passed on to the consumer in the absence of competition. If an importer is in a better position than competitors because of a special license, it feels less pressure to cut profit margins or supply cheaper. In such a situation, even without a direct increase in customs fees, the market may not enjoy the benefits of full competition.

This issue is more important in the Iranian market; Because the price of a mobile phone, in addition to the cost of foreign purchases, is affected by the exchange rate, import duties, transportation costs, registry, financing and inflationary expectations. Therefore, not all price increases can be attributed to import rent; But non-transparent mechanisms can be added to these factors and prevent the full transfer of cost reduction benefits to the buyer.

On the other hand, when access to official imports is difficult or uneven, some supply may be diverted to alternative routes. Published statistics show that the value of mobile phone passenger imports in 1404 reached about 490 million dollars, while this figure was about 280 million dollars in the previous year. This process alone does not prove the causal relationship with the points mentioned by the Court, but it shows the necessity of examining the commercial and passenger import policies at the same time.

In this way, in order to clarify the dimensions of this case, the Ministry of Privacy must specify the exceptions based on which resolution, with what criteria and in favor of which companies. The release of allocated quotas, the reasons for exceeding the legal ceilings, the status of investment commitments and the result of the review of the $96 million case can provide the possibility of public evaluation.

The main issue of this case is not just a large order registration; Rather, it is how to distribute economic opportunities in a market whose access depends on administrative decisions. As long as quota allocation criteria are not clear, traceable and uniform, the possibility of unequal advantages and weakening of competition remains.