From: Vincent W.J. van Gerven Oei
Illyrian Guard Has De Facto Nationalized Security Services

It was recently reported by Balkanweb that already more than 15 state institutions are protected by Illyrian Guard, a private company owned 100% by the Ministry of Interior. Until the establishment of Illyrian Guard in April 2019, security services were subject to public procurement.

Over the years, private security firms have kept prices artificially high through price fixing schemes. Exit has frequently reported about these cartels, which received little pushback from the Competition Authority. The last time security firms were fined for obstructing free competition was in 2012. Later investigations into price fixing schemes were all concluded without result.

The public procurement of security services for public buildings has no doubt been the main source of income for the private security sector. Between 2015 and 2019, Eurogjici earned 302M lekë (~€2.4M) from state tenders, Toni Security 481M lekë (~€3.9M), and Dea Security 138M lekë (~€1.1M). For local governments alone, the amount spent on security tenders from 2015 to 2019 amounts to 703M lekë (~€5.7M), which is over €1 million per year.

With the establishment of Illyrian Guard, the Rama government has de facto nationalized the greater part of the security sector, turning an oligopoly into a state monopoly. State institutions are automatically required to procure their security services from Illyrian Guard. According to Decision of the Council of Ministers (VKM) no. 177 of April 4, 2019,

10. All public institutions and subjects that administer state property, whose security needs to be realized by services specialized to this end, turn themselves, with a request, to this society for physical security and protection services.

11. If this society decides that it is unable to provide the requested services, public institutions and subject may secure this service according to the pertinent legislation in force.

Naturally, this led to resistance of the security firms. Gëzim Demiraj, owner of Pelikan Security and chairman of Union Security Albania, the professional society of security firms, stated in June:

According to our conviction, we say that this law directly attacks the right to business development of security firms. It is in an open conflict of interest because security firms have found themselves with this VKM outside any security market. This act also violates the law for public procurement because Illyrian Guard […] signs contracts without any market competition. […] This is a violation of the Constitution of the Republic of Albania, violation of the State Police Law, violation of the Public Prosecution Law, and violation of the Stabilization and Association Agreement.

With the publication of this VKM many of those firms will leave the market and many of these employees will tomorrow be outside the labor market.

Union Security Albania complained against the VKM at the Competition Authority and filed a lawsuit on May 25 at the Administrative Appeals Court in Tirana. In its verdict of July 25, the Competition Authority stated that Illyrian Guard services may be procured outside the public tender process through so-called “in-house procurement.”

The Competition authority further added, not without a sense of irony:

Seen from the perspective of competition, the increase of the numbers of those who offer services on the market profits free and effective competition by bringing the possibility of choice.

Finally, the Competition Authority advised Illyrian Guard to abide by art. 9 of Law 9121/2003 on the Protection of Competition, which prohibits “abuse of a dominant market position.”

The fact that already 15 state institutions have switched over to Illyrian Guard suggests that this dominant market position will soon be a fact. The establishment of Illyrian Guard will thus have a profound influence on the security market in Albania. This has not turned out for the worst for all companies involved. Remarkably, just at the moment his company suffered this major economic setback caused by a policy of the Socialist government, Safet Gjici, the director of Eurogjici, was elected mayor of Kukës for the Socialist Party.