January 19, 2010 / 5:48 PM / 8 years ago

UPDATE 3-Venezuela occupies French-owned supermarkets

* Officials, workers take control of Exito stores

* Occupation is first step in nationalization

* Government already owns several food companies (Adds worker comment, detail)

CARACAS, Jan 19 (Reuters) - Venezuela on Tuesday occupied supermarkets owned by France’s Casino, the latest move in a drive toward socialism by President Hugo Chavez, who accused the company of raising prices after a currency devaluation.

In his 11 years in office, Chavez has nationalized many industries in South America’s top oil exporter and on Sunday ordered the state takeover of the retail chain.

He believes he can slow high inflation before legislative elections in September by increasing the government’s hand in food distribution. Critics say he risks triggering shortages.

Government officials and supporters took over one of the supermarkets in Caracas and Interior Minister Tarek El Aissami said five other stores across the country were being occupied.

“At this moment all the Exito stores are being occupied,” El Aissami said in a television address, surrounded by banner-waving supporters.

“We are carrying out a temporary occupation, along with our worker colleagues, assuming operational control of Exito.”

In Venezuela, temporary occupation is the first stage in the expropriation of businesses which are being nationalized, a government official said.

Chavez accuses Exito of raising prices without good reason after Venezuela sharply devalued its bolivar currency Jan. 8. The stores will now be operated by the government under the name Comerso, selling food at cheaper prices.

Groups of workers this week demonstrated outside Exito’s stores, with some cashiers and lower paid staff in favor of the takeover, while management staff protested against the intervention.

“The company has been trampling all over us. We have already spent a lot of time discussing the collective contract and we are tired of being pushed around,” Jimmy Rodriguez, a worker at Exito’s store in the central city of Valencia, told state TV.

The government has closed down hundreds of stores since the devaluation, with 150 shuttered on Tuesday alone.

It already owns several food companies, including the popular Mercal markets which sell basic goods at subsidized prices. It also owns an importer and a large dairy.

“The announced nationalizations were intended in part to send a signal to other private businesses not to raise prices in the aftermath of a large VEF devaluation,” Goldman Sachs’ Alberto Ramos said in a research note.

“However, price repression is likely to backfire and lead to growing scarcity of goods,” Ramos said.

In 2007, shortages of milk and chicken were a factor in Chavez’s first electoral defeat, when he tried to rewrite the constitution.

Shares in Casino (CASP.PA) dropped 1.8 percent on Monday after Chavez announced the nationalization, but recovered on Tuesday.

Casino has played down the importance of Venezuela on its bottom line, saying Exito’s contribution to profit in 2009 was “almost nil.”

Many foreign companies have been hurt by the devaluation, which reduces the hard-currency value of their profits in bolivars. Spain’s Telefonica (TEF.MC) is seen losing about five percent of its equity value because of the move. (Reporting by Ana Isabel Martinez; Patricia Rondon and Eyanir Chinea; Writing by Charlie Devereux, editing Bernard Orr)

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