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Home » Economy » “Gondola Law”: specialists warn that it is unfulfilled and supermarkets promise to go to Justice

“Gondola Law”: specialists warn that it is unfulfilled and supermarkets promise to go to Justice

November 25, 2019 5:28 pm A+ / A-

INFOBAE – The attempts of the business chambers to prevent the representatives from moving forward with the “Gondolas Law” project did not work. Yesterday the lower house gave half sanction to the initiative of the opposition that had achieved majority opinion and that proposes, among other points, that a company may not have more than 30% of the space available in the shelves for each product category and there has to be a minimum of five suppliers for each. The objective, according to the text, is that there be equal opportunities for small and medium-sized businesses on supermarket shelves and that greater competition helps lower prices.

However, several economists and representatives of the supply companies and supermarkets warned that this rule, if sanctioned, will generate the opposite effect: rising costs, rising prices and layoffs.

“When the State gets in the middle of business relationships without knowing it does not facilitate anything. A regulation is a cost. A higher cost reduces the added value. By increasing intermediation costs, in some way, this will end up distributing between intermediaries, consumers and producers. That’s why the “Gondola law” is so harmful” (Spotorno)

Without success in the lower chamber of congress, the supplier companies and the big chains will now move forward with efforts before the senators to prevent the initiative from becoming law, although it is clear that the new government supports the project and will seek to boost it in any way. So much so that it appears as one of the proposals under study of the plan against hunger designed by the legislator and future Minister of Social Development, Daniel Arroyo.

In this context, the decision to prosecute the issue, which had already been analyzed when Governor María Eugenia Vidal sought to promote an initiative of this nature in the province, is moving forward among the chambers. Already on that occasion, from the Association of United Supermarkets (ASU), which brings together large supermarkets, they worked around this possibility, which today is getting closer.

If it becomes a law, the intention is to present legal protection to declare its unconstitutionality. The efforts against the progress of this project were faced not only by ASU, but also by the US Chamber of Commerce in the country (Amcham), which warned, in a recent letter that it sent to the legislative and head of the Commission of Consumer Defense, Marcela Passo, that the project “not only threatens basic guarantees such as the exercise of the tender industry, trade, use and disposition of the property -all of them enshrined in our Constitution- but also opens the door to international controversies.

In addition, the chamber warned in that letter that the loss of jobs, due to loss of profitability and efficiencies, is estimated between 5000 and 7000 people, and that an increase in labor costs in the marketing chain of 20% is expected and an increase in final sales prices to the public due to an incremental cost transfer from 10% to 12%. “This is how the project puts the entire marketing chain that supplies 70% of the market at risk. Also taking into account that, of the 10 largest private employers in Argentina, 4 are marketing chains that will be affected by the standard in question” said Amcham.

They warn that the cap of 30% participation in the shelves raised in the project “will generate operational complications to replenish products in a timely manner, causing shortages in shelves and / or stock breaks, which would have an upward impact on the price of the products, with the consequent increases in cost per additional replacement labor ”.

The advance in Congress of the initiative also generated adverse reactions from several economists. This is the case of Fausto Spotorno, of Ferreres & Asociados, who via Twitter sent a thread of tweets with a detailed explanation of how the market works and why the arguments of those who support the project, such as Elisa Carrió, lack realism . “Being a service, the butcher sells trust, just like the grocer or the greengrocer, the supermarket sells availability and ease of purchase. And the most important thing is that consumers choose and maximize our well-being, making purchases in different places. In fact, supermarkets are only 30% of the consumer retail market. ”

“This whole scheme is complex, there is the producer on one side, transporters, logistics services, supermarkets, warehouses, in the middle, and the consumer at the other. When the State gets in the middle of business relationships without knowing them does not facilitate anything. A regulation is a cost. A higher cost reduces the added value. By increasing intermediation costs, in some way, this will end up distributing between intermediaries, consumers and producers. That’s why “Gondolas law” is so harmful, ”said the economist.

Asked by Infobae, the economist of C&T Economic Advisors, Camilo Tiscornia, said that although supermarkets can often commit abuses in kicking payments to suppliers, moving forward with these types of regulations is not the way, and will also generate higher costs that will be transferred at prices. As he remarked, “there is no need to regulate intermediaries but to favor those producers can reach consumers directly. Encouraging competition implies trying to break down barriers and obstacles. You have to ask yourself why supermarkets are handled with large companies and why the small ones cannot meet expectations. And if it’s because the big ones put money, you have to sanction it, ”Tiscornia remarked.

On the other hand, Agustín Etchebarne, of Fundación Libertad y Progreso, said that “the gondola law is stupid, unfulfilled and with contradictory objectives.” He said that “it will create more useless bureaucracy, higher costs and more corruption, and therefore, will increase prices. “It increases the inefficiency of the economy. It would require an army of inspectors with tape measures. Statist socialism made Venezuela go from being the richest to the poorest in Latin America and put Argentina in depression since 2012. We are not going out with more statism and more socialism” said the analyst.

The initiative is well in the papers, but it is impossible to control. Hopefully contribute to expand the offer and variety of products, mainly in regard to the gondola space that does not exceed 30% the same variety (Lorenzo)

In turn, Guido Lorenzo, of the LCG consultancy, emphasized: “The initiative is well in the papers, but it is impossible to control. Hopefully, it helps to expand the offer and variety of products, mainly in what refers to the gondola space that does not exceed 30% the same variety. Regarding the 5 suppliers, it is difficult for some products to find that quantity ”.

For Aldo Abram, meanwhile, the project is “absurd, it will increase the marketing costs and, therefore, the prices that the consumer will pay, making the use of space more inefficient. In addition, it will generate a lot of useless public employment to control. That is, more taxes »

 

By Natalia Donato

“Gondola Law”: specialists warn that it is unfulfilled and supermarkets promise to go to Justice Reviewed by on . INFOBAE - The attempts of the business chambers to prevent the representatives from moving forward with the "Gondolas Law" project did not work. Yesterday the l INFOBAE - The attempts of the business chambers to prevent the representatives from moving forward with the "Gondolas Law" project did not work. Yesterday the l Rating: 0

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