How Does Competition Policy in Venezuela Look Like?

By Francisco Beneke*

Venezuela is a country with a high level of state intervention in the economy. Comparatively speaking, it has one of the highest yearly average investment rates in Latin America in the period between 1992 and 2012.[1] However, a big portion comes from the public sector, on average around 45 percent.[2]

The high level of government involvement in the economy is latent not only in its high share of investment but also in the widespread use of price controls. Venezuela has a Fair Prices Law that gives The Superintendencia Nacional para la Defensa de los Derechos Socioeconómicos the power to regulate the price of goods and services of any product in any stage of the production chain according to their strategic importance and benefit to the population (Art. 11, number 3).[3] The authority has issued several decrees with maximum prices for a wide array of products in the food, hygiene products, and services markets.[4]

In a country where state intervention is so pervasive the question arises: what is the role of competition policy?

One could think that, under such circumstances, competition policy would certainly take a back seat in the priorities list of policy makers. However, there are some reasons to believe that this is not the case. In November 2014, Venezuela’s president, Nicolás Maduro, issued with delegated powers from the national congress a new antimonopoly law. The statute was envisioned to serve as a tool in the fight against the so-called economic war.[5] For those who follow news about this South American nation, it is not uncommon to hear about empty aisles in supermarkets or how expensive the dollar is in black markets. Venezuela’s government has attributed this current predicament to a concerted action from its opposition and the private sector to destabilize the country and generate discontent in the population. This is what in the rhetoric of the government constitutes the economic war.

How has the new Superintendencia Antimonopolio handled itself in this scenario? To answer the question, a first approximation can be reached by looking into the authority’s enforcement activity and that of its predecessor. The use of the economic war term in Venezuela can be dated as far back as 2010 when Hugo Chávez declared war against the country’s largest corporate group[6] and it is still used today by Nicolás Maduro to accuse the private sector as the culprit of the current economic crisis. From 2010 to this date, there has only been one decision that found a firm guilty of monopolization.[7] There were no decisions punishing cartels and the rest of the cases where there was some finding of liability were regarding unfair business practices. Thus, the Superintendencia Antimonopolio’s (and its predecessor’s) contribution in the economic war has to be found in areas other than its enforcement practice.

To keep track of the Superintendencia Antimonopolio’s activity, one could survey its media and external relations communications. Starting with the authority’s webpage, upon access, a message appears stating that the economy should not be used as a war weapon and lists some countries such as Nicaragua and Chile, apparently for currently sharing or having shared at some point the same situation. This could signal alignment with the central government given the use of the same rhetoric to describe the economic crisis. However, one has to bear in mind that the Superintendencia Antimonopolio was created as an institution designed to fight in this so-called economic war. As a consequence, the use of the term comes as no surprise.

The authority’s twitter account tells a part of the story. After the results of December the 6th’s parliamentary elections evidenced an overwhelming defeat of the ruling party, the authority focused its social media efforts to transmit messages of comfort and encouragement to the revolution (term used to refer to the current government’s political agenda). It tweeted on how Hugo Chavez’s ideals were more alive than ever and that the people should walk with their heads straight. Amidst all these support messages, it was hard to find any communication of the authority’s activities regarding competition advocacy or law enforcement.

To answer the question of how competition policy looks like in Venezuela, at a first glance, it does not appear to be either an independent one from the central government or an active one in law enforcement. This post is a short one and has only aimed to provide a first approximation. Part of the answer also lays in taking a closer look at the 2014 law or simply waiting for more developments since one year of life could be construed as a short period of time in institutional years. With the promise of future posts on the matter, it will be interesting to see how the Superintendencia Antimonopolio works under the new political scenario created by this December’s elections.

*Co-editor, Developing World Antitrust

[1] Data from the World Bank Development Indicators, available at http://data.worldbank.org/indicator/NE.GDI.FTOT.ZS. Table for Latin America available upon request.

[2] Constructed from data on gross fixed capital formation, total and private sector, from the World Bank Development Indicators, available at http://data.worldbank.org/indicator. Disaggregated data for private investment was only available for the years 1997-2010. The tables for Latin America and calculations are available upon request.

[3] Leyes contra la Guerra económica (Laws against the economic war), p. 3, available at http://www.minci.gob.ve/wp-content/uploads/2015/02/Ley-contra-la-guerra-econ%C3%B3mica.pdf

[4] Http://www.superintendenciadepreciosjustos.gob.ve/?q=precios-justos.

[5]Leyes contra la Guerra económica, available at http://www.minci.gob.ve/wp-content/uploads/2015/02/Ley-contra-la-guerra-econ%C3%B3mica.pdf.

[6] ABC (Spain): “Chávez declara la guerra a la «burguesía»” http://www.abc.es/20100603/internacional-iberoamerica/chavez-guerra-burguesia-201006030413.html.

[7] Decision N° SPPLC/0043-2013 of December 23, 2013, available at http://www.procompetencia.gob.ve/images/resoluciones/cotecnica.pdf.

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One thought on “How Does Competition Policy in Venezuela Look Like?

  1. Reblogged this on Derecho y Política de Libre Competencia en América Latina and commented:
    Una primera aproximación de Francisco Beneke publicada en su blog Developing World Antitrust sobre el estado de la política y el derecho de la competencia en Venezuela. Perfecto para picarle la lengua a nuestro colega y amigo Ignacio de León.

    Like

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