Elisa Carrió, the larger than life lawmaker from the Radical Party (UCR), is set to present tough legislation aimed at penalizing big companies that “decide prices” (i.e. arbitrarily set prices) and, according to her, have taken advantage of the administration change in order to increase prices more than necessary — a major concern to consumers who are helpless before the exorbitant prices of meat, milk, bread and just about everything else you need for your table.
Carrió plans on tackling “economic concentrations,” i.e. controlling the formation of monopolies or oligopolies, through accelerated trials and by placing heavy sanctions on companies that “abuse [their] dominant position” in the market. More specifically, she is proposing the creation of a new Tribunal for the Defense of Competition. The Tribunal would be national, based in the City of Buenos Aires, with five members (president, vice president and three speakers with two substitutes) who would have to be over 30 and be either economists, accountants or lawyers. As a body, despite belonging to the jurisdiction of the Production Ministry, it would allegedly function independently of it. Being a member of the Tribunal will also be a full-time job: members would not work anywhere else. In addition, the tribunal would be in charge of authorizing different commercial operations between big businesses.
What is meant by “economic concentrations”? Carrió’s proposal basically seeks to control monopolies or oligopolies — where a market or industry is dominated by a small number of companies. Economic concentration would refer to the merging of commercial companies or transfer of commercial funds or properties that determine a company’s dominance in the market, meaning that they can define prices without competition. Companies would have to obtain previous authorization from the Defense of Competition Tribunal to carry out such operations. Furthermore, Carrió’s bill would directly forbid deals between companies that would result in limiting the offer of a product or negatively affect other competitors in the market.
According to Carrió’s bill, a dominant company is one that covers 40 percent of the market in question or one that is the only company to offer a certain product or service.
— Prensa CCARI Oficial (@CCARIPrensa) May 12, 2016
“Elisa Carrió says that Arcor and Molinos Río de la Plata must lower their prices: live from the Chamber of Deputies.” Carrió has consistently pursued the issue of inflation and unnecessary price hikes by large companies.
Sanctions on companies that “abuse [their] dominant position” in the market are potentially tough: they would not be able to provide the State with goods or services for two to five years (eight years if said abuse took place through a merger). Plus, should the Tribunal determine that a company has abused its position, it could order its dissolution or division.
Carrió’s proposals come during a time of high inflation and governmental price control mechanisms as price hikes by companies have been a recurring theme since President Mauricio Macri took office last December. Given the fact that lifting the cepo (foreign exchange rate controls) effectively devalued the peso and that everything from gas and electricity bills have increased tremendously, many have complained that big companies are taking advantage of economic uncertainty and inflation to increase the price of consumer goods far more than necessary. Carrió has named several fast-moving consumer goods (FMCG) companies guilty of “taking advantage” of the situation, such as multinational food companies Arcor and Molinos Río de la Plata, which own a lot of different brands and products.
- Read more: Government Launches ‘Clear Prices’ Online Index To Promote Competitive Supermarket Prices
There have also been various protests under the established hashtag #SuperVacíos (#EmptySupermarkets) as unions, politicians and citizens have called for nationwide strikes against big supermarket chains in order to draw attention to the increases in consumer good prices, which are often unrelated to inflation.
However, one thing to keep in mind as we direct our anger toward supermarkets and big companies is that ultimately, the real enemy is inflation, which can only be tackled with monetary policy — not by penalizing the supply part of the chain. So it could be argued that controlling monopolies and oligopolies would serve more as a bandaid rather than solve the whole problem.