Around the world, some products are illegally created as copies of others to take advantage of their image, but the Venezuelan government has gone much further. After Kellogg’s announced in 2018 that it would cease operations in the country, Maduro’s regime occupied the company’s facilities and began producing, placing a Venezuelan seal on the box without changing the brand name. Kellogg’s has responded with an international demand for the appropriation of identity and image.
Although a large number of companies have been expropriated in recent years, in the case of Kellogg’s this is an occupation of the factory after the cessation of activities. The demand of the grain producer is not the only one, other companies have taken legal action against the government over the years, for the use of its facilities after an expropriation or occupation, the lack of payments or the breach of contracts, as is the case of Kimberly Clark, Klorox, Owens Illinois, Holcim Limited, ConocoPhillips, Exxon Mobil, among others. Some of the lawsuits are still pending, but the legal differences that have been resolved have been in favor of the companies.
The use of Kellogg’s trademarks represents illicit appropriation and provides the precedents for the company to begin legal proceedings. The Kellogg’s production plant in Venezuela announced the cessation of operations on May 15, 2018, the same day government authorities took over the installations and the following year started production with the same image and names that Kellogg’s managed. The company immediately disassociated itself from its responsibilities for the quality of the products produced, the use of equipment and the safety of personnel or neighboring communities, because operations were no longer controlled by them.
The improper use of trade names has been coupled with the typical political propaganda that the government has throughout the country. At the factory, Maduro’s delegates placed a billboard with the image of the eyes of former president Hugo Chávez, who died six years ago but continues to be the government’s emblem of a socialist model through his face, eyes or signature all over the country. The boxes of products that have recently appeared for sale, of the brands that belong to Kellogg’s, have the colors of the Venezuelan flag and a logo of Maduro’s regime.
Maduro justified himself, about the unexpected closure of the company and the order to occupy and resume production, by saying that he considers that the cessation of operations, after more than 50 years of activity, was illegal for its employees. Some of the plant’s workers resigned after the announcement, knowing that some of the factories expropriated by the government have ceased to operate after a short time due to lack of maintenance, investment and other factors.
In Venezuela, there is a high-risk business environment, many entrepreneurs have become enemies of the government, there are no property rights guaranteed and the regime has restrictions that prevent regular and safe production. Kellogg’s is not the only international company that has ceased trading in the country in recent years. The causes are related to the deterioration and social and economic instability of Venezuela, legal insecurity, hyperinflation and the lack of raw material to produce adequately. The regulated prices also caused many companies like Kellogg’s to operate with losses and in lower quantities compared to the past.
Kellogg’s products reappeared in the country’s main supermarkets and stores in 2019, with no government response to the company. The occupation of the facilities does not represent an expropriation, because the procedures were different, without a beginning of the process of payment of compensation. In addition, there is a usurpation of the brand by presenting the products as Corn Flakes and Zucaritas, a decision that violates intellectual property laws, because the government does not have authorization for use on legal persons or their names.
The Criminal Code in Venezuela establishes that the use, falsification or alteration of trademarks or names carries a prison sentence, also that any damage to physical facilities would have legal consequences. This places legal responsibility on the people who are directing the production at present, but in Venezuela a similar case cannot be presented because of the partiality of the justice institutions, so the international demand is the only way that companies have to sue the government, even though these are slower processes.
Since the expropriations and occupations promoted by Chávez began, more than 60% of private companies have closed in the country. In 20 years, the productive and industrial sector has regressed considerably, influencing the jobs and the products available in the country. According to data handled until 2019 by the Venezuelan Federation of Chambers of Commerce and Production of Venezuela, 370,000 businesses have disappeared from the country’s economic scene in the last two decades; other commercial institutions speak of higher closure figures. In addition, the collapse of electricity with constant blackouts makes it unfeasible for the industrial park to be reactivated as before.
A signal and the word ‘expropriate’ were enough for Chávez to transfer a company into the hands of the government. The idea was inherited by his successor, who has continued with the measures against private property. More than 1,000 companies have been nationalized, expropriated and confiscated in the last 20 years. The controlled sectors are related to the oil, financial, commercial, construction, food, among others. Such is the case of Owens-Illinois, Sidetur, Fame of America, Agroisleña, Tidewater, Universal Compression Holdings, Kimberly Clark, Hipermercados Éxito, as well as others.
The majority of expropriated companies are currently working at a very low capacity, are paralyzed or have minimum production levels that are not sufficient to supply the country. When the shortage intensified, the government blamed private companies and other sectors, despite the fact that it has a portfolio of basic products with a falling production. Legal and economic insecurity caused multinational companies to debate between leaving the country or taking the risk of staying.
In 2018, Maduro admitted the failure of the productive model implemented by him and his ministers on television. These few words do not get anywhere without actions that allow the country to emerge from the greatest crisis that has faced the nation in its contemporary history, and that has plunged the population into serious social, economic, food and health difficulties.
Image credits: Toni Rivera