BUENOS AIRES, Argentina (AP) — Argentina's congress on Thursday approved a law that lets the government intervene in setting prices and profits in an attempt to tackle one of the hemisphere's most rapid inflation rates.
Economy Minister Axel Kicillof said the measure, approved earlier by the Senate, would defend consumers against "the innumerable abuses we suffer every day on the part of concentrated groups with monopoly power."
But local business leaders said the law is likely to aggravate shortages and inflation by discouraging people from selling price-controlled goods or making investments.
The law gives the state power to set profit margins as well as maximum and minimum prices. Companies that set prices considered "artificial or unjustified" can be fined. However, the government bowed to earlier complaints by exempting most small and medium companies.
The lawmakers also created a government agency to monitor prices and a legal system to resolve consumer complaints.
Pro-government congresswoman Diana Conti said the laws would give the government "instruments to defend users and consumers in a better way."
Conservative opposition lawmaker Pablo Tonelli argued that the government had been unable to resolve problems such as inflation and investment, "so now it is applying the only method it knows: intimidation."
Business groups said before the vote that past experience in Argentina and elsewhere showed that such laws lead to shortages of goods and services and the loss of jobs.
The government, however, argued the measure would protect small and medium business from being victimized by larger companies with a dominant position in the market.
Justice Secretary Julian Alvarez told National Rock radio that the new measure actually eases some possible penalties by removing potential jail time for businessmen found guilty of abuses and requiring judicial authority to search companies.
The government of President Cristina Fernandez has accused farm producers of holding back most of their soy harvest in hopes that a new devaluation might increase profits. The peso has been slumping against the U.S. dollar, with officials acknowledging inflation of 18.2 percent through the first eight months of the year, though private analysts say it may be running at 40 percent.