Venezuelan President Hugo Chavez said he will nationalize companies failing to comply with new price controls for consumer goods that the government is preparing to unveil.
The price regulations may affect companies including Procter & Gamble Co., Colgate-Palmolive Co. (CL) and Johnson & Johnson. A study showed consumers are being overcharged for cleaning products and personal care items, Chavez said on state television yesterday.
“We are getting ready to announce the new fair prices, and prices will go down,” Chavez said. “If a company doesn’t accept the new prices, we will nationalize it. We don’t have any problem doing that. Some of the companies to be affected are transnationals.”
Chavez, who is seeking to slow the region’s highest inflation rate of 27.6 percent, said in November that new regulations would set price caps on consumer goods to prevent companies from “ransacking the people.” The government immediately froze the price of 18 personal care items from toothpaste to toilet paper until “fair prices” could be set by regulators.
Guidelines published in the nation’s Official Gazette last year require companies to register with the national price regulator and disclose their costs for production, distribution and sales. They also must provide information about local and international suppliers, raw materials and technological transfers.
Price Freeze
The price freeze affected U.S. consumer companies including Colgate-Palmolive, Procter & Gamble and Johnson & Johnson. The companies have been able to raise prices in line with costs in recent years, Ali Dibadj, a consumer analyst at Sanford C. Bernstein & Co. said in a November report.
Colgate, Avon Products Inc. (AVP) and Clorox Co. (CLX) depend on Venezuela for 5.2 percent, 4.1 percent and 2.1 percent of total sales, respectively, according to Dibadj.
The announcement of new price regulations sparked panic purchases by consumers and led to shortages of everything from coffee to toilet paper.
“Some companies are threatening us and saying that price caps will create shortages, but I’ll nationalize all of it,” Chavez said yesterday. “It’s not something I want to do, but if they force me to do it, I will.”
