Tags: Venezuela | price | inflation | controls

Venezuela Extends Price Battle With Smurfit Plant Occupation

Monday, 02 Dec 2013 07:19 AM

Venezuela furthered efforts to mandate price reductions across the South American country by occupying a packaging plant and regulating pricing for commercial real-estate leases.

Venezuela President Nicolas Maduro on Nov. 30 said he had temporarily taken over a plant owned by Smurfit Kappa Group Plc, a manufacturer of container boards and solid packaging products, after alleged price speculation. In a statement, Smurfit described the action as an intervention.

Venezuela’s national assembly on Nov. 19 granted Maduro the power to enact economic laws, such as limits on profits, without the oversight of congress for one year. The former bus driver, who said that he would sign legislation today to limit car prices, last month used the military to occupy a chain of electronics stores for allegedly overcharging customers by as much as 1,200 percent.

“We are undertaking the temporary inspection of this company in order to guarantee raw materials for the food chain and to guarantee the supply of food products,” Industry Minister Ricardo Menendez said on state television on Nov. 30, referring to the Smurfit facility.

The surprise inspection of the plant in Venezuela’s Carabobo state revealed price increases of 166 percent for foodstuff packages and increases of 372 percent for other related products over the past year, Menendez said.

Commercial Leases

A unit of Dublin-based Smurfit retains management and is cooperating with authorities, the company said in a statement today. The action “allows for further inspections and audits covering areas such as tax, costs, pricing and employment practices,” it said.

Maduro on Nov. 29 said he would sign legislation to regulate the price of commercial real estate leases in the country, with a maximum price of 250 bolivars ($40) per square meter. Penalties against people involved in “price speculation” should be toughened and arrests should be made, he said.

“We have to be firm with those who are raising prices after inspections,” Maduro said, adding that 68 percent of Venezuelans supported state-enforced price cuts over the past month according to poll data he had seen.

Former President Hugo Chavez, who died of cancer in March, nationalized more than 1,000 companies or their assets during his 14 years in power.

Maduro is passing populist measures to regain support that has been eroded by the fastest inflation in the world ahead of municipal elections scheduled for Dec. 8, said David Smilde, a sociology professor at the University of Georgia. Annual inflation accelerated to 54 percent in October, the highest rate in 16 years.

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Venezuela furthered efforts to mandate price reductions across the South American country by occupying a packaging plant and regulating pricing for commercial real-estate leases.
Venezuela,price,inflation,controls
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2013-19-02
Monday, 02 Dec 2013 07:19 AM
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