Pedro Castillo presents constitutional reform bill to ban monopolies

This afternoon, the president of Peru, Pedro Castillo, sent a letter to the head of the Congress of the Republic, María del Carmen Alva, in order to submit for consideration by the Legislature a draft law on constitutional reform for prohibit monopolies.

This initiative aims to “amend article 61 of the Political Constitution of Peru in order to strengthen the actions of the State and guarantee free competition”. That is, it seeks to incorporate into this mechanism the precision that the State facilitates and monitors free competition “in accordance with the principles and purposes of the Social Market Economy”.

In this regard, it points out that “monopolies, oligopolies, hoarding, speculation or price coordination are prohibited, as well as the abuse of dominant positions in the market”.

This proposal expands on the current content of the above-mentioned constitutional article. It merely establishes that, with regard to free competition, the State “combats any practice that limits it and the abuse of dominant or monopolistic positions” and that “no law or agreement may authorize or establish monopolies”.

The Executive's proposal adds a paragraph to the current constitutional text. It states that “the law establishes the corresponding penalties in the civil, administrative and criminal fields for natural or legal persons who fail to comply with this prohibition”.

WHAT DOES ARTICLE 61 OF THE CONSTITUTION SAY?

Article 61: “The State facilitates and monitors free competition. It fights any practice that limits it and the abuse of dominant or monopolistic positions. No law or concertation may authorize or establish monopolies”.

“The press, radio, television and other media of expression and social communication; and, in general, companies, goods and services related to freedom of expression and communication, cannot be subject to exclusivity, monopoly or hoarding, directly or indirectly, by the State or individuals.”

ACTIONS AGAINST FREE COMPETITION

In order to achieve the objective of avoiding actions that limit the exercise of free competition, the government has found it necessary to establish as a constitutional obligation not only the fight against monopolies and oligopolies, but also against figures such as hoarding, speculation, price coordination and abuse of dominant market positions.

At present, the figure of hoarding is not considered a crime, since this condition was removed by legislative decree 1034, issued in 2008. The argument was that classifying it as such would be contrary to the principle of social market economy and free competition.

Speculation if it is a crime, enshrined in article 234 of the Criminal Code, but its punishment has been made conditional on the fact that such practice affects the prices of a list of goods “officially considered of basic necessity”. In the absence of such a relationship, this criminal figure cannot be applied.

PEDRO CASTLE

On the previous day, the head of state announced that the Government will submit a series of bills to Parliament. In addition to the prohibition of monopolies, hoarding, speculation and price coordination, Castillo announced that he will propose the reduction of the salary of senior government officials

“We are going to work on a bill to see how ministers, starting with the Presidency of the Republic, and our congressional brothers, make a salary cut, so that we can show that,” he said.

“We have to work for the good of the country, for the most vulnerable sectors,” the president stressed during the Fourth Decentralized Council of Ministers held yesterday in Huancayo.

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