Chavez orders takeover of French hypermarket chain

[February 04, 2010]  CARACAS, Venezuela (AP) -- President Hugo Chavez on Sunday ordered the expropriation of a French-owned hypermarket chain that operates close to a dozen stores in Venezuela, accusing it of price speculation following the country's currency devaluation.

Chavez said his government would seize control of the Exito hypermarket chain, majority owned by France-based Casino Guichard Perrachon SA, after lawmakers approve legislation allowing the expropriation of businesses that have raised prices inordinately.

A conglomerate of Colombian companies -- Sindicato Antioqueno -- holds a minority share of the company.

"I want a file to be opened, and I'll wait for the new law to begin the expropriation of the Exito chain because this cannot be permitted," Chavez said during his weekly radio and television program. "How long are we going to allow a transnational company ... to come here and do this?"

Calls to the offices of Exito seeking comment went unanswered on Sunday.

Victor Maldonado, who leads the Caracas Chamber of Commerce, Industry and Services, criticized Chavez's announcement, saying government takeovers of private businesses will only exacerbate Venezuela's economic woes.

"The president must correct his economic policy," Maldonado told Union Radio, saying Chavez's socialist-orientated economic policies and efforts to boost the state's role in the economy "are going to ruin us."

The bill proposed by Chavez could be approved next month, pro-Chavez lawmaker Mario Isea told the state-run Bolivarian News Agency on Sunday.

"It establishes a prohibition on raising prices without economic justification," Isea was quoted as saying.

Chavez has repeatedly threatened to seize businesses that raise prices in response to the country's first currency devaluation since 2005. His government is seeking to contain inflation that finished the year at 25 percent, the highest in Latin America.

The socialist leader eliminated the previous fixed rate of 2.15 bolivars to the dollar on Jan. 8. His government set a new two-tiered rate: 2.6 per dollar for priority goods, such as food and medicine, and 4.3 for imports of nonessential items, such as air conditioners and electronics.

The devaluation is widely expected to drive inflation higher.

Last week, Venezuelan soldiers accompanied government inspectors as they temporarily shut more than 1,000 of retail stores, aiming to prevent hefty price hikes. Inspectors from the consumer protection agency said the businesses, including three warehouse-sized Exito stores, were shuttered for 24 hours because they had improperly raised prices.

[Associated Press; By CHRISTOPHER TOOTHAKER]

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