Sunday, November 02, 2008

Competitors conspired to keep wheat prices high

During the past 18 months, Salvadorans have suffered from soarig prices for basic foodstuffs. In September, the Salvadoran authorities made it clear that not all of the price rise came from the forces of a "free market." The government has taken action against the two sellers of wheat flour in El Salvador who had conspired to divide up the market and not compete against each other.

In September, El Salvador's Superintendent of Competition announced
$4 million in fines against the companies MOLSA and HARISA. They were found guilty of entering into a conspiracy to divide the market 55% to one and 45% to the other in order to keep prices high:

The agreement between MOLSA and HARISA distorted the competitive conditions of the market for wheat flour and caused artificially high prices. Such circumstances affected in a negative manner the food situation of the population, principally in the lower income sectors, and the small, medium and large businesses that utilize wheat flour as a primary ingredient in their processes.

The high price of flour had led the country's bakers to march in protest in February of this year. One could argue that $4 million in fines is too tiny for conspiring to drive up the price of food in a time of growing hunger.

In other investigations of high prices, the Superintendent of Competition announced an investigation of the telephone industry in July.


Kadmiel said...

why is it always about the "green eyed monster" there has to be a beter way

Anonymous said...

Thank you for taking on this matter, I am still amazed that they only thing they got as punishment was a $4M fine, when they should have gotten jail time for this, and set an example.