High Court Strikes Down Part of Guaro Monopoly

June 23, 2006

With Executive Branch plans to lift state monopolies on telecommunications, insurance and fuel already generating discussion this week (see separate story), the Judicial Branch ruled against a monopoly on another product: guaro.

Before the decision from the Constitutional Chamber of the Supreme Court (Sala IV), the National Liquor Factory (FANAL) had the exclusive right to produce, market and sell the liquor, 30% alcohol by volume, in Costa Rica. The factory’s Cacique brand is among its top sellers.

Sala IV justices voted June 14 to uphold FANAL’s exclusive right to produce guaro, but allow other companies to import and sell the liquor, according to the daily La Nación.

A suit filed in 2004 by Marvin Arce, the representative in Costa Rica for Salavadoran guaro Cañal, prompted the justices’ decision, the daily reported. The two justices who dissented, of a total of nine, wrote in their opinion that the Legislative Assembly, not the Sala IV, is the place to decide the future of the FANAL monopoly.

President Oscar Arias, asked about the ruling Monday, said that he hasn’t mentioned the Liquor Factory in his criticisms of monopolies because it’s “less important,” but that the Sala IV ruling “would benefit all of us who drink alcohol if there were competition, because we wouldn’t have to drink only Cacique.” (He added that Cacique is, nonetheless, “very good.”)

He did not comment on the possibility that FANAL would be closed, saying he needed to speak with Production Minister Alfredo Volio; however, Volio told the daily Al Día he thinks “the state should be doing more important things” than producing and selling liquor.

Carlos Villalobos, manager of FANAL, told La Nación that the production of illegal liquor, without Public Health Ministry approval and without paying taxes, has diminished the factory’s share of the market; FANAL sold 840,000 cases of Cacique in 1999 and only 490,000 last year.

 

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