ABSTRACT
The Brazilian institutional environment In the mid-twentieth century, Brazil was characterized by intensifying its industrialization process when the agro exporting economy of the time created opportunities for investment in the industry and public services sectors. A side effect of the fast industrialization and accelerated urbanization was high and persisting inflation. The increased cost of living promoted strikes organized by worker’s unions and caused much political tension in the country. In this general context, and for a long period, the state tried to contain the price increase of basic products by means of specific policies designed not only to keep prices down but also to guarantee product supply to the consumer. The food retail segment was then subject to strict government control, as were many other products and services. Table 6.1 summarizes the evolution of the legal provisions that affect the retailing of food and essential products in Brazil. In 1951, federal Law no. 1.521 released a definition of crimes against the public economy, which included non-compliance to the official price tables for essential products and services (Da Mata, 1980). More specifically, food pricing control was done by a government agency called COFAP (Federal Committee for Supplies and Prices). The COFAP had the mission of ensuring distribution of services and goods with full authority to determine their prices. Violations of the law (such as selling goods for a higher price than the maximum allowed, or not having the official listing of prices fully visible to the consumer at a commercial establishment) were punished with a variety of different fines. The effectiveness of the COFAP overall ruling over prices however, was low. As noted by Da Mata (1980: 915): ‘despite the use of many powerful legal instruments, the COFAP experience can hardly be called a success. Its extinction in 1962 did not bring any considerable losses to the mass of consumers.’
