Thursday 2 February 2023

Another Ruling in Favor of Protectionism, Sala IV Ratifies Ban On Rice Promotions

The Constitutional Court ratified the prohibition to sell rice with another "free" product. Merchants argue that such a ban hurts the consumer.

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1 February 2023 - At The Banks - BCCR

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The price of rice in Costa Rica is fixed by law. The Constitutional Court ratified the prohibition to sell the rice with some other “free” product stuck with tape on the side of a bag rice with a tape, called “bandeo” and a common practice by retailers in Costa Rica.

In Costa Rica, the Constitutional Court or Sala IV has rejected an appeal of unconstitutionality against the prohibition imposed by the Ministry of Economy, Industry and Commerce (MEIC) on carrying out promotions in the rice retail trade in the country.

Rice is the grain product most consumed product in Costa Rica and the only one that maintains prices fixed by law.

The price of rice in Costa Rica is fixed by law.

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Questioned is the prohibition of the retail practice called “bandeo”, combining another product, usually taped to the package of another, in this case, a bag of rice. Merchants commonly the bandeo in many other product promotions, such as pastas, sauces, snacks, beverages and even cleaning products.

The bandeo is used compete in the market since the price of rice can not be lowered.The practice has been rejected by the national rice sector, particularly because it is carried out, on many occasions, with imported grain at lower prices than local value, calling it an unfair competition.

The Government, through MEIC, responded to the complaint and prohibited such offers and promotions by decree signed by the President on April 4 of this year.

The Corporación de Supermercados Unidos (Walmart, Masxmenos, Pali) filed an appeal with the Sala IV.

The argument put forward by the magistrates when rejecting the appeal of unconstitutionality filed by Walmart was based on the fact that “… that type of promotion undermines the measure on price fixing. These are commercial practices that tend to evade or circumvent such pricing, the ruling said.” The ruling was made on July 26.

Mariela Pacheco, Walmart’s Corporate Affairs coordinator, said that the ratification by the Sala IV harms the consumer since it will not be able to receive additional free products with they buy a bag of rice.

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In addition, the measure foments the unfair competition before the incapacity of inspections on the part of the MEIC, according to the supermarket chains.

“We have repeatedly said that this legislation is not complied with by all the commercial establishments in the country and we have told the MEIC authorities that there is a material impossibility of conducting inspections at more than 8,000 commercial establishments that sell food,” Pacheco said.

In the issue of fixing the price of rice, Pacheco argues that it has proved that it does not benefit the consumer, but rather a few industries in the rice business, and very lucrative for them.

“Pricing fixing,” she added, “is a temporary measure that in the case of Costa Rica has almost become permanent.

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“We will analyze the resolution to see how we will proceed,” she concluded.

Source: La Nacion

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