site.btaModern Trade Association Raises Concerns over Methodology for Assessing Price Increases

The Association for Modern Trade (AMT) disagrees with the methodology for assessing the economic justification of price increases that has been put forward for public consultation, according to a position paper released by the organization on Thursday.

The AMT said that while fully supporting the legitimate objectives of protecting consumers, containing potential inflationary pressures and increasing market transparency in the period following the introduction of the euro in Bulgaria on January 1, 2026, the draft contains economic, financial, accounting, mathematical and legal shortcomings which, taken together, undermine business initiative and create scope for administrative arbitrariness, while failing to reflect the actual dynamics of the fast-moving consumer goods market.

According to the association, the draft goes beyond the role of a simple information indicator and effectively becomes a form of administrative control over profits and margins. The AMT said the methodology uses incorrect mathematical operations, severely restricts the permissible reasons for price changes and removes any flexibility from commercial policy, while using unjustified administrative methods to interfere with and distort supply mechanisms that have proved effective and best respond to consumer demand. The association said similar attempts had been made in the past, despite their contradiction with established principles of a market economy and repeated evidence of their ultimately negative impact on consumers.

"Pricing is a complex process in which a retailer takes into account the overall costs of its operations, investment needs, staffing and logistics costs, as well as many other factors, along with the need to maintain a certain level of economic efficiency in its offering," the AMT said. "If a product generated a certain level of profitability before an increase in its purchase price, it is economically justified for a subsequent change in its selling price to allow that profitability to be maintained rather than reduced."

According to the association, however, the approach envisaged by the methodology recognises only increases in specific costs that can be demonstrated in monetary terms, while classifying any increase above them as an "unexplained component". The AMT said this indirectly restricted retailers' ability to maintain their existing profitability rate, despite Article 3(1) stating that the methodology does not determine an acceptable level of retail mark-up or profit margin. The association said this created an internal contradiction between the stated principle and the actual assessment mechanism.

According to the AMT, applying the methodology in its current form would create a risk that products with lower profitability or greater cost volatility could cease to be offered, as retailers would not be able to adjust their prices in a way that maintained the economic viability of offering them. The organisation said this could result in a reduction in the range of products available and the delisting of some items, which would run counter to consumers' interests and the diversity of products on offer.

In this regard, the AMT said the methodology should explicitly allow selling prices to be adjusted following an increase in purchase prices to the extent necessary to maintain the established level of profitability, determined at the level of a product category, group of goods or commercial activity.

The position paper said the methodology placed too much emphasis on equating "economic justification" with a "demonstrated increase in the cost per unit". According to the association, this did not fully encompass the statutory concepts of "conditions of supply" and "economic activity", nor the economics of multi-product retail, in which prices, volumes, overall costs and margins are managed in an interconnected manner.

According to the AMT, if the methodology remains in its current form, there is a risk that entirely rational, competitive and financially sustainable pricing behaviour could be deemed economically unjustified, not because it lacks an objective basis, but because that basis cannot be reduced to a single demonstrable cost per unit of a product.

The association therefore believes that the methodology should be refined before it is adopted, so that it maintains a strict evidential burden on retailers while allowing for all objective, verifiable and quantitatively or economically measurable factors recognised by law. At the same time, the AMT said, a mechanism should be avoided whereby the method used to calculate an economically justified price increase effectively restricts the ability to maintain an established level of profitability. According to the association, only in this way can consumer protection, legal predictability and a normal competitive pricing mechanism be ensured simultaneously.