Venezuela: Gov't applies new prices, profits law

February 13, 2014

The period allowed for businesses to adjust their prices to the government's new “fair prices” law ended on February 10. The government has a wave of inspections planned to ensure the measure is applied.

The Law for the Control of Fair Costs, Prices and Profits aims to stop price speculation, product hoarding and other activities that are destabilising the Venezuelan economy and contributing to its ongoing economic problems.

Further, a maximum profit margin of 30% has been established across the economy to stop companies over-charging.

Ahead of the law coming into effect, President Nicolas Maduro said: “From Monday, someone ... who is hoarding and speculating will have the law enforced on them. No one has any excuse, because it [the law] has been three weeks since it was published.”

For the past year, Venezuelans have experienced high inflation and shortages in some basic goods. The value of the US dollar on the illegal market has increased to over 12 times the official value.

The government says these problems are due to an “economic war” being promoted by business sectors opposed to the government. It says these sectors stall production, hoard or divert products, and speculate on prices to provoke discontent and raise profits.

The new law contains punishments for 30 economic crimes, including between two and 14 years in prison depending on the offence committed.

The law also allows for hefty fines for offenders and stipulates that authorities can temporarily occupy companies deemed to be breaking the new regulations.

A case of product hoarding was discovered in the days before February 10. The Venezuelan Daily Industries company was found to be hoarding 72 tonnes of powdered milk, a Venezuelan staple in short supply. The milk will be distributed to supermarkets, and the company fined about $380,000.

[Abridged from Venezuela Analysis.]

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