The general manager of the Association of Supermarketers of Uruguay (ASU), Daniel Menéndez, considered that the initiative proposed by the Broad Front and studied by a Senate commission for the protection of small and medium-sized businesses is “an unproductive project” that attacks to large surfaces instead of defending small businesses.
Menéndez made his assessments before a group of senators: “We consider that it is an unproductive bill. It has operational aspects or vices that make the situation very complex”.
“With reference to the operational aspects, in gross terms we think that this is precisely against small and medium-sized companies, whether they are suppliers or retail colleagues, as we are,” he added.
According to Menéndez, ASU represents approximately a third of the food and beverage delivery market.
“We are talking about the large chains plus some other independent supermarket that is not part of a chain but has a large size in its premises. The other two thirds of the market correspond to pharmacies that today sell our products, from stores, yerba mate and others; service stations, and mainly stores, small supermarkets and fairs, which also sell fruit, vegetables and some other products”.
“This project would attack the third and not the two thirds, which it wants to benefit. Twenty-five years ago that third has been maintained; has not advanced. In other countries of the world, supermarkets or department stores represent almost 80%, but in Uruguay this is not the case”.
“There is a law on large surfaces – if I am not mistaken, it is from 1985 – that does protect small and medium-sized establishments, to the extent that it does not allow more large chains or large surfaces, except within a shopping center or some similar enterprise. ”.
Providers
“We are not the owners of the market. Yes, in this period there has been a concentration in suppliers, not in supermarkets”, continued Menéndez.
“Today, the greatest difficulty that smaller businesses may have is on the side of the concentration of suppliers, because they are the ones that have the power in the negotiation.”
For Menéndez, supermarket owners “are not a detriment” to medium and small businesses, but on the contrary, “other small businesses are usually installed next to a large establishment, which benefit from the flow of people who come to the stores. supermarkets”.
the cons
The representative of the supermarkets summed up: First, the bill establishes a thirty-day payment to the supplier”.
“Extracting a single variable from a commercial negotiation such as payment is a complicated issue because it is part of a negotiation that implies price, term, place of delivery, promotion, volume,” he explained.
“Removing just one variable complicates the business equation. The terms are generally negotiated. Not everyone charges, as they say out there, ninety days or one hundred and twenty days. There are providers who charge weekly.
“It depends on the product and its rotation, because for a product that rotates in forty-five or sixty days, payment in thirty days is complicated. On the other hand, for a product that rotates every week, a much shorter payment is often agreed upon, ”he specified.
“That would imply very restrictive providers. Perhaps, as the Pareto Law says, 20% would keep 80% of the sale, which would greatly harm the small and medium-sized companies that are suppliers to supermarkets, because if they have a product that rotates less, that It implies that after thirty days they cannot be paid, to the extent that the merchandise has not yet been sold in that period.
investments fall
“Also on the side of the limitation we find a difficulty, in the sense that if we start to limit, the investments are going to fall. There are companies that are currently investing in new premises, and that would be suspended,” Menéndez asserted.
“We must think that a store with a commercial area of 500 square meters – which is not one of the largest – requires at least 120 employees. Statistics say that 65% of those who work in supermarkets are women; many are single, young and heads of household. Also, the entry requirements are very basic.”
“It is a gateway to the labor market for many people,” he said, adding “who then use that experience to go to work in a perhaps better place. Others can’t because they don’t have access. All of this would be restricted and the employees would be harmed.”
“We have 30,000 people working. There are companies with 7,000, with 6,500, with 5,000 employees and so far we have not had any problems. We got through the pandemic without sending any employee to unemployment insurance, but if investments are restricted, there will surely start to be problems.”
Initiative can be declared unconstitutional
The legal advisor to the supermarket owners, Gonzalo Lorenzo, pointed out that the FA project can be considered unconstitutional because “it limits the right to work, industry, commerce and property, which are constitutionally protected.”
“The labor law includes the freedom to work but also the exercise of any lawful agricultural, industrial, commercial or professional activity. This is recognized by all constitutionalists.”
“The project limits the right of industry and commerce and prevents the development of commercial exploitation in the way that the market allows it,” added Lorenzo.
“The project also restricts the right to property by establishing an arbitrary limit to the development of people’s assets, to the extent that it prevents them from owning or operating commercial establishments in any way.”
Lorenzo limited: “This law not only does not indicate the reasons of general interest that lead to the limitation of these fundamental rights that I have just mentioned, but it does not even invoke it and it is not deduced from its content.”
“In fact, the project, to the extent that it establishes arbitrary limits to the installation of businesses, also indirectly establishes a restriction on market access for new companies, already installed in other places. At least this is the case when a limit is imposed throughout the national territory.”
“The rule is inconsistent with the purpose it pursues. Every time access to the market is restricted, even under these conditions, that market remains captive for the companies that are present and with this the inverse effect of what is intended to be protected is generated”.
“We understand that the concern of the legislators who present the project is contemplated in other laws already in force and that they have mechanisms in place to avoid the evils that may exist, the vices that arise in the explanatory statement and that this law intends to correct or eradicate”, considered the legal adviser
