Jaramillo Sebastian-1103795-Articulo 2do Corte

Negotium
E-ISSN: 1856-1810
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Miguel Unamuno Foundation and
Jugo Venezuela
Agostini, Javier
Monopoly and oligopoly: cause of closed companies in Venezuela. Study of a case in the state
of Zulia. SIDERPRO Group
Negotium, vol. 6, no. 18, January-April, 2011, pp. 46-
73 Miguel Unamuno and Jugo Foundation
Maracaibo Venezuela
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Date / Citation:
JAVIER AGOSTINI (2011) MONOPOLY AND OLIGOPOLY: CAUSES OF ENTERPRISES
CLOSED IN VENEZUELA. A CASE STUDY IN THE ZULIA STATE. GROUP SIDEPRO
/www.revistanegotium.org.ve 18 (7) 46- 73
MONOPOLY AND OLIGOPOLY: CAUSES

OF ENTERPRISES CLOSED IN VENEZUELA.
A CASE STUDY IN THE ZULIA STATE.
GROUP SIDEPRO.
MONOPOLY AND OLIGOPOLY: CAUSE OF
COMPANIES CLOSED IN VENEZUELA. CASE STUDY
IN THE STATE ZULIA. SIDERPRO GROUP. (*)
JAVIER AGOSTINI (**)
University of Zulia
Abstract
The economy has been impacted because of the monopoly and oligopoly Venezuela markets. This study
analyzes the causes of the closure of the main company producing pipes for the oil industry in Zulia State.
(Group SIDERPRO) It is a research field, documentary and descriptive. The information was collected on
experiences arising in the process of expropriation and recovery. As a result evidence of the need to propose
a macroeconomic planning and control allowing to speed recovery of closed industrial parks and Venezuela
recovery process model.
Key words: Monopoly, oligopoly, planning and control, recovery.
Summary
The economy has been impacted by monopoly and oligopoly in the Venezuelan markets. This study analyzes
the causes of the closure of the main company that produced pipes for the Oil Industry in Zulia state. (Grupo
SIDERPRO) It is a field, documentary and descriptive investigation. The information was collected through
experiences raised in the expropriation and recovery process. As a result, the need to propose a
macroeconomic planning and control model that allows accelerating the recovery of closed industrial parks
and in the process of recovery in Venezuela is evident.
Keywords: Monopoly, Oligopoly, Planning and Control, Recovery.
1
* This work is part of the results of an investigation called Proposal of a macroeconomic planning and control
model to reactivate closed companies and companies in the process of recovery in Venezuela. Attached to
the Doctorate in Economic Sciences of the Division of Graduate Studies. Faculty of Economic and Social
Sciences (FCES) of the University of Zulia. (LIGHT).
** Mechanical Maintenance Engineer. (UPSM, 1998). Ordinary Professor at the Dr. Rafael Belloso Chacín
University. (2005). Dean of Extension. Directorate of Continuous Training. (2007). Master Scientarum in
Industrial Project Management. West region manager of after sales and services HONDA motor de Venezuela.
Maracaibo Venezuela. Mobile: 04146430483. Email: agostinijavier@gmail.com / agostinijavier@hotmail.com.
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INTRODUCTION
Strategic considerations intervene in economic decisions: Each

company must take into account how its actions can affect its rivals and
how they are likely to react. According to Baye. (2006); This can be the
origin of survival or strangulation of the economic activity of a company.
This narrative analyzes some structural features of a sector of the
economy for which one of the most important issues has been cited, such
as Monopoly and Oligopoly, the main cause of Closed Companies in
Venezuela.
For Hugo Chávez Frías. (2005); President of Venezuela, it is contrary

to the National Constitution that there are Closed Companies in the
Country. The perspective of this issue is related to a real case of a
company that was strangled by large corporate capital during the decade
of 1985 - 1995, many cases like this undoubtedly that have been seen
and argued as destabilization of capital and not only of the In the
Venezuelan economy but in nations of Central America, South America
and the Caribbean, this has resulted in a high rate of unemployment,
paralysis or closure, in addition to the dullness and cessation of internal
wealth in many countries with the decline in production that has been
replaced by the importation of products. This article analyzes the causes
of closure of the (SIDERPRO Group), located in Venezuela in the Zulia
state between the Cabimas and Simón Bolívar municipalities. This
industrial park was expropriated by the National Government in 2005 and
is currently in the process of recovery. To study the context of this article,
the essential theoretical aspects of the structure have been addressed in
the following parts.
The first part deals with competition, market structures, and the
economic variables of perfect and imperfect competition. In the second
part, the theoretical development of monopoly, oligopoly, market
conditions and
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economic competition of companies. The third part addresses the

equilibrium of the monopolistic and oligopolistic competition market,
framing the topics related to the condition of competition.
In the last place, with these aspects, it is possible to absorb the most
characteristic variables that make up a restrictive study of the theoretical
- practical, addressing the competition from the conjunctural point of view
on the issue of the production and commercialization of steel in
Venezuela based on a chronological criticism against monopoly and
oligopoly as the main cause of closed companies in Venezuela. The case
study is about the STEEL COMPLEX. “SIDEROCA –PROACERO known
as“ GRUPO
SIDERPRO ”. Located in the Zulia State between the Cabimas and Simón
Bolívar Municipalities.
THE MARKET STRUCTURE AND THE ECONOMIC

VARIABLE OF PERFECT AND IMPERFECT
COMPETITION.
For Pindyck and Rubienfeld. (2005); A monopolistically competitive
market is similar to a perfectly competitive one in three key respects: The
first type of market structure is a monopoly. When there are several
companies and the entry of new companies is not limited. But the
incompatibility of this is that the product is differentiated. Each company
sells a brand or version of the product that differs in quality, appearance
or reputation, and each is the only producer of its own brand. What
translates into a legal privilege or market failure, this determines a
difference since there is a producer with great power being the only one
in the industry that owns it.
The degree of monopoly power that the company has depends on its
success in differentiating its product from the products of its competitors
or other companies. As the cases of the sauce
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/www.revistanegotium.org.ve18 (7) 46- 73
tomato, laundry detergent, packaged coffee, and pasta. However, the

dark side of these positions often means that capital seizes the
competition in different ways where the powerful merges or strangles to
remove the competition from the market and establish a single product
with extremely high prices due to the lack of products. and lack of variety
or competition in the market.
The second type of market structure examined by many and in this

study is the Oligopoly. Informality or rather darkness and silence when
directly or indirectly a paralysis or closure of a company of less or equal
capacity that has been weakened is caused. This is the meaning of the
loss of jobs, importation of products, and destabilization of the economy
of many countries, especially Latin American and the Caribbean, due to
violations and irregularities that go unnoticed in the monopolistic
competition itself and the oligopoly. Issues such as where the product that
companies produce can be differentiated: As is the case with steel. In
oligopolistic industries,1Monopoly power and profitability depend, in part,
on how firms interrelate. If the relationship is more cooperative than
competitive, firms can charge prices well above marginal cost and obtain
large profits.. In some oligopolistic industries, firms cooperate, but in
others they compete fiercely, even if it means making a lot of profit. To
understand all this, it is necessary to see how oligopolistic companies
decide the level of production and prices. These decisions are complex,
since each company must act strategically, and when making a decision
it must weigh the likely reactions of its competitors.
The third type of market structure The one that must be constantly
scrutinized is the cartel. Where there is no substitute product. In a market
where there is a cartel, some or all of the companies explicitly collude,
coordinate their prices and their production levels to maximize their joint
profits. In reality it is
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important to reveal some figures. Ten to twelve large companies,

supported by three dozen other smaller companies, control the world's
food supply. Its members control the Anglo-Dutch-Swiss food cartel,
which is concentrated around Britain's House of Windsors. Run by the six
big grain companies: Cargill, Continental, Louis Dreyfus, Bunge & Born,
André, and Archer Daniels Midlands / Töpfer. Cartel for food and raw
materials run by the Windsors, who have absolute control over cereals
and grain production, wheat from flour, oats, barley from corn and rye
throughout the world. In addition to this they control meat, milk, table oils
and fats, fruits,
Every year tens of millions of human beings die due to the lack of basic
foodstuffs, this means that at first glance a cartel may resemble a pure
monopoly, after all, their companies act as if they were part of a large
company without taking into account It tells how their pricing decisions
affect the production levels of the segment that they do not control. In the
background is being able to observe how the members of a cartel are not
part of a large company and may be tempted to deceive their partners
and competitors by charging a lower price and taking a greater share of
the market.
This is the reason why many cartels tend to be unstable or short in

time. A particular case related to the above is the poultry industry where
competitors try to standardize prices and sometimes betray themselves
to dominate the market by placing products below the agreed prices
despite the existence of a price regulated by the Government that protects
the final consumer. , all these actions lead to the same end the control of
the market.
Other widely cited cases of great impact in Venezuela is that of the

industry dependent on STEEL, as support for this criticism is
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it reflects the dark side of a contradictory reality hidden behind monopoly

and oligopoly, a source that has significantly affected the economies of
nations.
THE MONOPOLY.
It is the opposite model of perfect competition, that is, when the
company is the only seller in the market because it is in situations such
as the following:
• Total control of the offer of a product.

• Possibility of producing at a very low cost enough volume to supply
the entire market at a profitable price lower than that of any
competitor.
• There is exclusive provision of patents inherent to the product.
• There is exclusivity granted by the government to produce a product
or provide a service, or the exercise of a monopoly directly by a state
company.
The logic of economic reasoning indicates that in these cases the

monopoly supplier, when it is a private company, will try to stay at the
level of activity that optimizes its cost-volume-profit ratio. On the other
hand, if it is the State, it can pursue different political, social and / or
economic objectives. Monopoly is the extreme case of imperfect
competition and occurs when there is a single producer who has absolute
control over price management and also implies that there is no substitute
product that can replace the product of the monopoly seller. Pindyck and
Rubienfeld. (2005). The Monopoly is the situation of a sector of the
economic market in which a single seller or producer offers the good or
service that the demand requires to cover the needs in that sector.
For a monopoly to be effective, there does not have to be any type of

substitute or alternative product for the good or service that the company
offers.
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monopolist, and there should not be the slightest threat of entry by

another competitor in that market. This allows the monopolist to control
prices. To exercise monopoly power, a series of conditions must be met:
a) Control of an essential resource to obtain the product. b) Have a
specific technology that allows the company or company to produce, at
reasonable prices, all the necessary quantity to supply the market; This
situation is sometimes called a "natural" monopoly. c) Have the right to
develop a patent on a product or a production process. d) Enjoy a
government franchise that grants the company the exclusive right to
produce a good or service in a certain area.
When a market has a monopoly composition, there is simply a single
firm that supplies the good or goods from a specific basket of goods. In
market terminology, a "good" monopoly is usually called a monopoly that
arises as a consequence of the majority will of consumers who, in a true
democratic (market) process, vote with their purchases and refrain from
buying in order to decide which is the supplier. that it should prevail over
its competitors. This decision is irreproachable from the democratic point
of view because it arises from the will of the majority of consumers who,
without government interference, have thus decided to allocate their
scarce resources to those who they consider to best satisfy them. The
decision ultimately rests with the consumer. (The town itself),
A monopoly company, like any other business, has to face two

determining forces: 1) A set of demand conditions for the good or service
it produces. 2) A set of cost conditions that determine how much you have
to pay for the resources you need to produce and for the work required in
production.
Every company or company must adjust its production to maximize its

profits; that is, it can maximize the difference between what it receives
from its sales and the costs it has to cover to
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produce the quantity of goods sold. The level of production that

maximizes profits is given by that quantity that allows the highest possible
price to be set. The considerations made in the case of monopoly are
applicable to all so-called oligopolies, cartels and Trust. There is
technically no difference between monopolists whether they are one or
many.
THE OLIGOPOLY.
According to Harris, (1997), an oligopoly is called that market structure

in which there is a reduced number of producers (companies) compared
to an innumerable number of buyers. The oligopoly is the organization of
the market in which there are few sellers of a commodity. Therefore, the
actions of each seller affect the other sellers. As a result of this, unless
some specific assumptions are made about the reactions of the other
companies to the actions of the company under study. A market
dominated by a small number of producers or distributors or suppliers. A
market that is in an intermediate position between what is known as
perfect competition and a monopoly, in which there is only one
manufacturer or distributor. An oligopolistic market can present, on some
occasions,
However, producers have incentives to collaborate by setting prices or
dividing up market segments, leading to a situation similar to that of a
monopoly. These types of policies are prohibited by antitrust laws and by
antitrust laws. But they also depend on companies honoring their
agreements. Oligopoly occurs when few companies are influenced by
prices in the market. There are a few vendors. No one dominates, but
being few can coalesce to influence prices and quantities. There are
companies with the capacity to act in collusion.
In oligopolistic markets, such as the food market and the detergent
market, there are often long
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periods of price stability. Producers simply compete by advertising their

products (for example, the typical advertising phrase "wash whiter") and
other techniques such as the distribution of coupons that can be
exchanged for various items. To make pricing decisions, companies
operating in oligopolistic markets use game theory. The game consists of
anticipating the reaction of competing companies to changes in market
conditions and being able to plan the policy to follow in order to achieve
the maximum possible profitability. Achieving an optimal result depends
largely on companies behaving in a rational way. In a zero-sum game, the
total return is fixed, so that one company can only improve its position at
the expense of the others.
In non-zero-sum games, one player's decision can benefit everyone
else. The competition is not as closed as in other models such as
monopoly competition. The conditions necessary for them to occur in an
oligopoly, and that at the same time differentiates it from other models,
could be the following:
• Competitors maintain close communication, either direct or indirect.
• No restrictions are imposed on competitors who wish to participate
in the market segment, the entry of these new competitors can only
be indirectly restricted.
• Oligopolistic competitors can reach substantial deals, either direct
or indirect.
• The competition is not as closed as in other models such as
monopoly competition where their position makes them basically
illegal.
• They generate a strong tendency to not respect them (to betrayal),
when it is convenient for one or another participant.
It is also often the case in the oligopoly that one company is the price
leader and the others are forced to follow it. Or that partial agreements
are concluded between only some of the bidders.
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Some characteristics that allow the oligopoly to be identified are:

Limited number of companies or two companies (duopoly), single good
without close substitutes, price-decision makers, depending on the
decisions of the rest of the oligopolists, the competitors maintain a close
relationship and may or may not arrive According to agreements, the
decisions of each one of the producers affect the performance of the rest.
The emergence of oligopolies leads to a reduced number of companies

possessing the key resources, preventing the entry or exit of other
companies and can then speak of a scarce good, or a good that results
only from specific conditions, such as oil fields (which do not They are
found all over the world, but in specific areas of the Earth).
On the other hand, the existence of oligopolies tends to vary over the
time horizon, for example, in Ecuador there was an oligopoly in the
supermarkets area: Supermaxi and Mi Comisariato, which gave them
broad market power in their specialty, but, In recent years, grocery stores
have grown to become the direct competition of Supermaxi and Mi
Comisariato, new supermarkets such as Santa María, Magda Espinoza
or TIA, have managed to distribute more equitably the market of their
specialty and end the oligopoly of supermarkets.
So the oligopoly is a market in which a small number of suppliers

operate who are highly dependent on each other. The reason that they
are few lies in the entry barriers (heavy investment, patents, among other
aspects). Their pricing decisions can be made independently or by
making agreements between them. In reality, there is a great tendency to
promote agreements giving rise to the so-called clubs of this or that
branch in order to obtain greater profits, to ensure the position of each
one, reduce uncertainty, to control the entry of new suppliers to the
market, in other aspects.
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In Ecuador, on the other hand, the State found it necessary to introduce

a new company to the market. In the mobile telephony market in Ecuador
there were only two companies: Porta (América SA de México) and
Bellsouth (OTECEL SA), in this way, a duopoly was formed that,
regardless of having had agreements, maintained high prices for
consumers and their efforts to improve themselves and offer better
products in the market were few. The Ecuadorian State, through the fixed
telephony companies (Andinatel SA and Pacifictel SA, later only
Andinatel SA) of which it is the majority shareholder, creates TELECSA,
the Mobile Telecommunications company of Ecuador, concessioned to
SWEDTEL SA, for which The ALEGRO PCS brand enters the market,
and the reaction was almost immediate. Today, the three companies
remain in the market (Bellsouth became MoviStar, once OTECEL sold the
company to Telefónica de España) with more accessible prices and the
mobile telephony market has expanded to such an extent that its products
are considered within the calculation of the Basic Basket. The State can
also refrain from taking any action, that is, when the actions of the
companies do not seek to take control of the market, but rather to increase
the total market surplus; that is, increase efficiency. It can also refrain from
taking any action, that is, when the actions of the companies do not seek
to take control of the market, but to increase the total market surplus; that
is, increase efficiency. It can also refrain from taking any action, that is,
when the actions of the companies do not seek to take control of the
market, but to increase the total market surplus; that is, increase
efficiency.
In order to identify the differentiated goods according to Diego Saravia

(2003), it is necessary to merge the Oligopoly. The theory of games.
Homogeneous and heterogeneous oligopoly. For example, the Oligopoly
in the cell phone market that originates when there is a small number of
companies in the same sector, which dominate and have control over the
market. These companies can produce the same goods or services (such
as products, such as steel, cement, industrial alcohol, which are
physically the same and hardly differentiated) or goods or services
differentiated by some particular aspect, such as products such as
breakfast cereals, detergents, or some household appliances. This is a
very similar case to monopoly, however, power is not concentrated in a
single producer,
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Each one of the producers, since they produce a significant amount of

the total, has an important control over the market, which gives them the
power to intervene and manipulate the prices and quantities of the product
in the market. In this way, there is more than one product of the same
type in the market, but, due to the control and power that these companies
have, the same problems and limitations that the monopoly imposes
appear. One of the most common entry barriers imposed by the oligopoly
is the amount of money necessary to enter that select group of producers
that exist in the market. Given the existence of such powerful producers
in the market, a new producer who wishes to enter it would need a very
large amount of money that would allow him to compete without being
eliminated from the market early.
Other cases like the one raised is when the value is transformed and
is not preserved. Towards specific legislation for Free Software for
example. In the nascent Knowledge Society, the relationships between
computer programs or "imperative languages for machines" and the
economy constitute the space where the fundamental contradiction of the
same arises that leads us to the following question: Is knowledge capital
or not? As differentiated elements in the Knowledge Society and in the
framework of undertaking the economic study, the variables of the
"economic" model can be observed, on which I can base The economy
as the science of scarcity, or the study of the way in which societies they
use scarce resources to produce valuable goods and distribute them
among individuals.
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BALANCE OF THE MONOPOLIST AND OLIGOPOLIC

COMPETITION MARKET.
The equilibrium of the company according to Michael R. Baye (2006)
in the Monopoly Competition market model is subject to the condition that
if the companies in a market of these conditions obtain economic gains in
a long period of time, in a near future other companies will enter the
industry in the long term. This shifts the demand of each company
downwards, since the market segment must now be divided among more
competitors, eventually causing profits to disappear and all producers
only produce to survive.
Likewise, the prevailing market price is such that no firm has any
incentive to change its own price or output. Thus, the competition at a
given moment can become so close that the producers themselves only
support distributing their market segment among themselves, and with no
other competitor, since otherwise, the profits will reach very low degrees,
for subsequently become losses.
In an oligopoly, the market in which there is a small number of

companies that produce a homogeneous good or service and, through
their position, exercise market power, causing prices to be higher and
production to be lower. These companies maintain this power by
collaborating with each other, thus avoiding competition. The problems of
oligopolistic entrepreneurs have two types of solutions: with or without
collusion. Collusion is any agreement that restricts the competitive fight
between companies. The maximum form of collusion, the one that
maximizes the profits of the oligopolists is the cartel, an agreement
between all the producers in the industry that can take two forms:
Competition without prices. Each company tries to improve the quality,
the presentation or any other factor, but respecting the agreed set price.
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Distribution of quotas or markets. Each company is assigned either an

area to sell or a maximum production that cannot be exceeded. In both
cases, the situation becomes in fact a monopoly, the benefits will be
maximum and there will be the loss of efficiency studied in the previous
section. But agreeing is not as easy as A. Smith thought. If the agreement
consists of the distribution of quotas, no company will be satisfied with the
one assigned to it, all will want to produce more. If what is tried is to fix a
common price, the most efficient companies, those with advanced
technology that allows them to produce at a lower cost, will push for the
price to be low, while the less efficient ones will favor a high price. . Due
to the difficulty of these negotiations, Once an agreement has been
reached, some rigidity will appear, there will be difficulty in changing
agreements to adapt to changing market conditions. Another additional
difficulty comes from the legislation of many countries that prohibits
collusive practices and on occasions it has been possible to demonstrate
and punish some industrialists for making proposals or pressures of this
type.
The best alternative to the cartel avoiding all those drawbacks is price
leadership. It is a very common situation in the business world.2When
there is a leading company in the market, it sets the price and conditions
of the offer that are accepted by all the others without the need for
negotiations.
There are three types of companies that can be singled out for
leadership. The dominant company; that is to say, the largest, the one
with the largest participation quota by far from all the others. This will also
be the one that has the most information, which by knowing the conditions
of demand on a larger scale will be able to estimate the most stable and
beneficial price. The one that enjoys the lowest costs for having the most
advanced technology. This case is even more stable since if the company
that fixed the price were one with high costs, the price would also be
excessive and it would be more likely that the situation would lead to a
price war. The one that enjoys prestige and social respect. It is also
common for an oligopolist, for
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your age or training, is considered by your competitors as an expert and

capable of diagnosing the changing conditions of demand, so they will
accept your decisions.
CRITICAL ANALYSIS ON THE CHRONOLOGY OF

MONOPOLY AND OLIGOPOLY AS THE MAIN CAUSE OF
COMPANIES CLOSED IN VENEZUELA. RESULT OF THE
CASE STUDY ON THE “SIDERPRO” COMPLEX.
LOCATED IN THE STATE ZULIA.
Among the findings found during the development of the research on

the case study, it is possible to mention some results obtained, managing
to observe how the workforce was deceived, which perhaps was not able
to observe with the soul what it could not see with the eyes until the
expropriation of this company in order to be able to clearly understand
why many countries are today third world countries as a result of the
backwardness of their economies today destroyed by the oligarchy of
large capitals that have destroyed many industries, especially those of
steel in the Southern Cone of the Americas.
Grupo SIDERPRO was a complex where its workers were thrown into
the streets by a game translated into the Monopoly and Oligopoly that
strangled this Industrial park that generated more than 2,500 direct and
indirect jobs. Today the Punta Gorda parish of the Cabimas Municipality
of the Zulia state is turned into a ghost town since the cessation of
activities of this so important productive space was led to misery. The
historical summary on the investigation of this case is as follows:
• The steel complex was created in 1956 in the Cabimas Sector Punta
Gorda municipality, Zulia state. By Mr. Ángel Prieto Anato.
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• From this date until 1990 it belonged to the State. Hugo Hernández
Rafalli was its president on behalf of the Government. And in 1991 he
went to Banco Maracaibo, following Hugo Hernández Rafalli as private
president, due to economic problems, for the purchase of raw materials.
• Said company is decapitalized since the money was diverted, then
in 1993, part of the shares go to SIDOR, due to raw material
indebtedness, the money was diverted again. (Caracazo National
Economic Crisis).
• Banco Maracaibo declares bankruptcy and FOGADE buys the
share of SIDOR and expropriates the part of the shares that belonged to
the Bank. By then Hugo Hernández Rafalli continues as president of the
complex.
• FOGADE invests and puts the complex into operation at the end of
1995, beginning of 1996 and then offers the complex. (It was auctioned
and sold at a relatively low price on existing assets at the time).
• Several companies participate in the FOGADE offer, including a
Mexican partner linked to the TECHINT group and CA CONDUVEN.
• The TECHINT group, TABSA and SERAR are the three large
transnational groups that lead the production and commercialization of
tubes. These groups are in charge of buying companies from third parties
to close them and be able to monopolize the market; achieving that the
production of tubes is well below demand and forcing the oil industry to
buy at excessive prices the product which is necessary for distribution
and storage. CA CONDUVEN's relationship is with these transnationals
and other steel connections, all linked to the Techint Group such as
(Hylsamex, Siderar-Sidor and the three Argentine plants of Acindar),
leader of the Central and South American market.
• It is when the good Pro (awarding of the complex offered to the
winner) is won by CA CONDUVEN.
• Starting in 1997, the complex was installed as an extension of the
four floors they have in Victoria (CA CONDUVEN, floor 5). The
representatives of the complex guaranteed the repowering of the
production lines and job stability.
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• For the year 1998. The massive dismissal of approximately 700

workers begins, the cause alleged by these representatives was that
there were no production orders having raw material to produce in the
tanks and tubes in the warehouses to dispatch. Between 2000 - 2002 the
CONDUVEN group created an alliance with the other powerful
consortium in Venezuela such as UNIVENZA and the UNICON
Consortium was created, the union of UNIVENZA with CONDUVEN. Who
have alloyed all the hardware and pipeline centers nationwide. The
factory was sacrificed at the cost of the rights of more than 1,000 families
and the decrease in manufacturing as part of the growth of the country's
gross domestic product (GIP).
• The strategy was to divide the complex into four parts to hide the
complex's exit from the market, and among other things tax evasion and
internal corruption within the company. In general, the complex was
producing until the end of the year (1998) and the beginning of the year
(1999). During the period (1997 - 1998) it remained with the SIDERPRO
Group Figure, (1 year), being owned by
CA CONDUVEN, in mid-1998, the figure was changed with the name of
CA CONDUVEN, PLANT NUMBER 5, the complex became an extension
of Victoria Aragua state, they operated in the West until the end of the
year (1999).
• As a result of this, they try to maintain production intermittently due
to the problems that arose with the communities when they closed
(demonstrations and seizures of the complex) but only with 10 - 30
workers who were offered contracts for very short periods to pretend the
operation of the plant and try to hide the monopoly. Representatives
always establishing a position that there are no production orders or
demand in the market when PDVSA has had a growth in its facilities
where part of the demand is tubular products.
• This situation occurs until 2002 when it closes completely and
leaves 4 to 10 people in the shelter of the facilities.
• This approach does not agree, since the plants in Victoria, Aragua
state, did not stop production and today it is working with consecutive
shifts 24 hours a day. It's obvious
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So the intention of acquiring the complex was to close it down and

monopolize the market by laying off the workers. (The company did not
leave labor debts with them and they were liquidated above what the Law
establishes).
• Another point of view is that SIDOR has been the supplier of raw
material during the 50 years of the company's history or, failing that, the
raw material was imported. (The shortage was low because there was
good planning) other suppliers were Brazil, Mexico, Morocco, Germany
and Canada.
• There are sustainable supports on the trajectory of demand for these
products (API Carbon steel pipes of circular profile with longitudinal seam
in diameters between 2 and 16 inches), such as the consumption
demanded by the national oil industry and currently the energy demand
and industrial projects that require these products that are being imported
or forcibly bought from UNICON, Venezuela having the facilities where
the raw material is produced and the plants where high quality tubes are
manufactured. Another point of view is the access that the consumer may
have due to the high prices that affect the sectors of the construction of
houses with structural pipes.
• Currently the complex has been closed for 10 years: Within this,
there are 4 articulated facilities for the operation of the company: The 6KU
production line, known as the SIDEROCA plant (it was 85% operational
until the time of the expropriation, it was later dismantled for collapse its
early start); the W10 Production line known as the PROACERO plant (it
was operational 60% until the time of the expropriation, it was later
dismantled to collapse its early start-up); Central machining workshop
known as PROSEINCA (70% operational until the time of the
expropriation, it was later dismantled to collapse its early start-up); and
General Services of the Complex known as SERSIOCA. (50% was
operational until the time of the expropriation,
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• The takeover by the former workers and the community began in

February 2005 with vigils and an ocular inspection by Judge William
Machado was made possible, which showed that the existing equipment
in the plants was operational in a good part, this visit was promoted by
the representatives of the company so that the community desisted of the
taking.
• The representatives of CA CONDUVEN offer 60 jobs distributing the
corresponding income sheets, a fact that did not have answers, at this
time they had 13 people working in the plant which was reduced to 6.
• The senior managers of UNICON Industries bought transport fleets
to move the tubulars necessary for the oil industry from the state of
Aragua to the state of Zulia, thus enriching the aforementioned individuals
with their own means of transportation, thus increasing the cost of the
product to the Oil Industry Venezuelan when the tubulars themselves
were practically in the PDVSA Occidente yard in Zulia state.
• This situation was a set-up since the company representatives did
not fulfill what was promised, therefore, the representatives of this
complex were accused of deception by the community and workers since
they did not want to negotiate for the reactivation.
• On Monday, September 05, 2005, the gates of the complex are
taken again, because between September 02 and 04 in the early hours
of the morning, approximately 70 tons of equipment are smuggled as airs
at the rear of the facilities. conditioners, spare parts, coils, parts of control
boards, computers and passes of the production lines of the PROACERO
and SIDEROCA plants.
• The former workers with the support of the communities stormed
the gates and called the notary public to record the dismantling of part of
the plant and that other equipment had been packed.
• The vigil on the part of the workers and the communities was
permanently safeguarding the facilities for a period of time, avoiding
dismantling, but without violating the condition of
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private property because the seizure process is attached to the law.

(Constitution of the Bolivarian Republic of Venezuela) Art. 62, 97, 130.
• On September 22, 2005, the request for expropriation for public
utility of said complex was delivered to the National Assembly, a
commission made up of more than 300 workers accompanied by the
community made an appearance in Caracas, at the National Assembly
and requested formally the declaration of public and social utility
presenting sufficient evidence since these capitalist, neoliberal
businessmen, in the 6 years that have passed, did not want to negotiate
with anyone, neither with the community, nor with former workers, nor
with the call of the proposed framework agreement by the National
Government.
• On September 27, 2005, the National Assembly declared the steel
complex of public and social utility, the Recovery process began within
the framework of the Expropriation Law for public and social utility.
• The UNICON group is an alliance of the strongest companies in the
metallurgical branch, such as CA CONDUVEN and UNIVENZA, leaders
of the national pipe market, has ties to the monopoly both in Latin America
and worldwide. By 2005 they had 10 lawsuits open for commercial
monopoly.
• Between the months of June - October, the government conducts
eight (08) censuses among former workers of the complex and residents
of neighboring communities, 1500 people fill out the forms.
• On November 2, 2005, Hugo Chávez President of the Republic
signs the Decree (4036) of public and social utility.
The expropriation case to reactivate the complex is based on several
articles of the Constitution of the Bolivarian Republic of Venezuela;
Among these articles is article 5, which maintains that: “Sovereignty
resides non-transferable in the people, who exercise it directly in the
manner provided in this Constitution and in the law, and indirectly, through
suffrage, by the organs that exercise the Public Power. ”; in Article 113,
which reads as follows:
Monopolies will not be allowed. Any act is declared contrary to
the fundamental principles of this Constitution,
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NEGOTIUM
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activity, conduct or agreement of individuals whose object is the

establishment of a monopoly or that lead, by its real effects and
independently of the will of those, to its existence, whatever
form it will take in reality. It is also contrary to these principles
the abuse of the dominant position that an individual, a group of
them or a company or group of companies, acquires or has
acquired in a certain market of goods or services, regardless of
the determining cause of such a dominant position, as well as
in the case of a concentrated demand. In all the aforementioned
cases, the State will adopt the necessary measures to avoid the
harmful and restrictive effects of the monopoly, the abuse of the
dominant position and the concentrated demands,
Article 115 that states the following sentence:
Property rights are guaranteed. Everyone has the right to the
use, enjoyment, enjoyment and disposition of their property.
The property will be subject to the contributions, restrictions and
obligations established by law for purposes of public utility or
general interest. Only for reasons of public utility or social
interest, through a final judgment and timely payment of just
compensation, may the expropriation of any kind of property be
declared.
Among other Articles of the Constitution of the Republic, since there

are documents issued by the representatives of the UNICON group where
they refuse the reactivation and agreements with both the surrounding
community and with the former workers who asked the assembly for the
reactivation of this colossal industrial complex to contribute to
endogenous development and the Eastern Coast of the Lake, job creation
and reactivation of the country's productive apparatus. In addition to this,
the main industry (Petróleos de Venezuela. SA) continues
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NEGOTIUM
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affected today since it currently imports products such as steel pipes for
industrial and development projects, failing which it is forced to buy from
INDUSTRIAS UNICON.
Counting Venezuela with industrial plants that are capable of producing

and competing with national and international markets. Today the reality
is different, the National Government with the support of all the workers
demonstrate how in a competition the oligopoly and the monopoly
competed under a dark figure that crushed the productivity and economy
of a sector of the Venezuelan productive apparatus in another sense, it
seized the market for petroleum and structural pipelines beyond iron and
steel production.
After 7 years of the closure of the steel complex and more than four
years of struggle on the part of the workers, the productive activities of
this important company have not been able to start, the control of the
market continues under the leadership of large capitals. Industrias
Unicon, CA Linked and merged directly with: Grupo Techint (Hylsamex,
Siderar-Sidor and the three Argentine plants of Acindar). Leader of the
Central and South American market. Among so many nazcas petróleos
de Venezuela (PDVSA), the main Venezuelan oil industry, demands more
than 5,000 million dollars (US $) annually in products derived from iron
and steel. Then it will be delivered under decree to the Zuliano
Development Corporation (CORPOZULIA), and to the Ministry of Labor
and Social Security (MINTRASS) in 2006 the start-up was transferred to
Petróleos de Venezuela. A plan to install new lines is currently under
study since they were excessively deteriorated during the transition from
expropriation.
Countless are the countries affected and the populations that do not
conceive the reason for the destructive phenomenon or the darkness of
the declining economies weakened by monopolistic competition and
oligopoly that hides under another confused face and evident collusion
that shakes the wealth of the nations that increases the most powerful,
but that impoverishes reduces to silence those industrious and
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rich in nature with aspirations to compete and introduce their products in

the markets in order to compete. All this leads to the need to propose a
macroeconomic planning and control model that allows the National
Government to accelerate the reactivation of closed companies and
companies in the process of recovery in Venezuela.
On the other hand, the case of co-management in closed companies

and in the process of reactivation is an issue that in addition to being
complex, there are very few case studies in Venezuela that have emerged
from the exercise of the use of best practices, most of which have been
developed based on trial and error by trying to create or emerge a new
model that allows the creation of socialist means of production as the
viability for the productive development of the country.
CONCLUSIONS.
Businesses can make more money by colluding and agreeing to raise

prices, but antitrust laws often prohibit this. They can all set a high price
without colluding, each trusting that their competitors will do the same, but
they find themselves in a captive dilemma, which makes it highly unlikely.
Each company has incentives to violate the agreement by lowering its
prices and attracting sales from its competitors, maximizing its profit. On
the other hand, when relationships become mixed and synergy occurs,
the link or merger originates the extreme, monopolistic competition and
oligopoly act as driving agents and paralyze or strangle companies by
buying, sacrificing or closing them under the premises of low profitability,
minimization. of profit, and shortage of products "at a snail's pace or low
demand." No economic and financial technical assistance, high bank
interest rate. Added to all the Trade Measures that favor the large
developed countries.
68
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The SIDERPRO complex is currently in the process of recovery, it has

been considered for the last 20 years the most important in the West of
the country and one of the first 5 most important in the Nation. It was able
to generate 700 direct jobs and up to 2,000 indirect ones. This park
occupies an area of 240,000 m2 made up of all its plants and facilities
that have been disabled during the last 15 years. The workers with the
community did not recognize the right of those who have attacked the
human integrity and quality of life of so many Venezuelan families,
denying in turn the right to work, in addition to the contribution to the
national productive apparatus.
It is worth highlighting, as part of the conclusions of this investigation,

words spoken by three (3) important figures for the country, such as the
President of the Republic and two of his former Ministers on the subject:
“It is contrary to the National Constitution that there are Closed
Companies in the Country. Venezuela's economy is currently enduring
the closure of more than 700 companies and more than 1,149 that are
paralyzed according to official figures. " Chávez, Hugo, (2005), President
of Venezuela.
It is necessary to end dependency, so we must fracture the

subjection structures originated by the dominance of the
markets, we must put into operation the closed companies, to
recover the companies it must be with the strength of the
workers. This is the way to meet the objective of fighting
poverty. It is important that the employer who wants to
reactivate his company with the Government keep in mind that
he must give participation to the workers in the management,
direction and benefits of the same. Iglesias, María, (2005),
Former Minister of the Ministry of People's Power for Labor.
The companies failed not because they were not profitable from
the economic point of view of it, because they all closed on a
certain date and at a certain time during the years 1990 - 1994,
the death date of the incipient model
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NEGOTIUM
Date / Citation:
productive Venezuelan whose gravedigger was the neoliberal

model, most of the companies that closed in Venezuela have
been due to the fall in production, as a result of low prices,
monopoly, no credit assistance from the State to producers
during the decade of the 80s and 90 and the non-technical
assistance to the means of production. They were also
bankrupted by a high bank interest rate that made most of them
unviable or unprofitable, in addition to trade measures that favor
the large developed countries. All of this translates into a
neoliberal model. Jagua Elías, (2005), Former Minister for the
Popular Economy.
FINAL THOUGHTS.
Quantum are the cases evidenced in countriesWhat.
ARGENTINA, BRAZIL, URUGUAY, ECUADOR, BOLIVIA and
VENEZUELA, that show another side of the economic sciences. The
domain structures. "Big Companies" try to control market lines and
thereby strangle trying to monopolize, consolidating markets and market
positions. Monopolies under the perverse logic of accumulation at low
cost and at the expense of the productive labor force of the companies
paradoxically reverse an efficient economy.
While it is true that from a logical point of view that 3the exact
application of science is achieved by improving the economies of nations
and the quality of life of the inhabitants to the extent that capital is
profitable. It is also true that the economy is greatly affected when jobs
are closed and the domestic productive apparatus of a nation is
depressed, which also translates into a delay in the coefficient of human
development of a population to be able to combat the poverty, inflation,
the devaluation of the currency, all these identified as a proliferation of
viruses that attack and annihilate the productive apparatus and the gross
domestic product of a Nation.
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In Venezuela today these viruses are being fought with the support of
the National Government in order to eradicate this disease that
contaminated the Venezuelan economy for more than 40 years. Other
factors that should be mentioned as the most important point of this study
is the government's drive for the rational treatment of needs, the allocation
of resources, production, the rationality of conduct and consumption
against this monster of unreasonable capitalism.
Finally it is necessary to infer in the following: 4 The market is not the

one that determines the economic policy of a nation only, it is the needs
of a population and its inhabitants.the Power 5It is the Consumer
Individual who demands the agent to be able to produce and offer the
goods and services that make and are part of life on this planet. It is the
governments that must ensure the custody and protection of their
economies and economic growth. All these reasons lead to the
justification of the proposal in development of the planning and control
model to accelerate the recovery of closed companies and in the process
of expropriation as centers of socialist production that articulate
cooperation networks to bring products to the final consumer at prices
accessible for the population and economic growth of Venezuela.
BIBLIOGRAPHIC REFERENCES.
Constituent Assembly. (1999). Constitution of the Bolivarian Republic of Venezuela.
Official Gazette No. 5,453 dated March 24, 2000. Caracas: National Printing Office.
Baye, Michael. (2006). Business Economics. Madrid: Ed. McGraw Hill, pp. 236-266.
Chávez Frías, Hugo. (2005). Chávez Announces Expropriations of Closed Companies.

Available in(http://www.aporrea.org/endogeno/n63341.html,2005). Retrieved September
19, 2005.
Harris, N. (1997). Microeconomics. Mexico. Prentice Hall. pp. 226-350.

Iglesias, Maria. (2005). Chávez Announces Expropriations of Closed Companies.
71
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Date / Citation:
Available in (http://www.aporrea.org/endogeno/n63341.html, 2005). Retrieved September

19, 2005.
Jagua, Elías. (2005). Chávez Announces Expropriations of Closed Companies. Available

in(http://www.aporrea.org/endogeno/n63341.html, 2005). Retrieved September 19, 2005.
Pindyck, R. and Rubinfeld, D. (2005). Microeconomics. Mexico: Prentice Hall. pp 350-420.
Saravia, D. (2003). Economyand Legal Status of the Software. Available in

http://biblioweb.sindominio.net/telematica/saravia.html. Retrieved September 19, 2005.
BIBLIOGRAPHY.
Constituent Assembly. (1999). Constitution of the Bolivarian Republic of Venezuela.
Official Gazette No. 5,453 dated March 24, 2000. Caracas: National Printing Office.
Baye, Michael. (2006). Business Economics. Madrid: Ed. McGraw Hill.
Chávez Frías, Hugo. (2005). Chávez Announces Expropriations of Closed Companies.

Available in(http://www.aporrea.org/endogeno/n63341.html, 2005).
Retrieved September 19, 2005.
Dominick, S. (1998). Microeconomics. Mexico: McGraw Hill.

Gould, J. and Lazear, E. (1994). Microeconomic Theory. Mexico: Economic Culture Fund.
Harris, N. (1997). Microeconomics. Mexico. Prentice Hall.

Iglesias, Maria. (2005). Chávez Announces Expropriations of Closed Companies.
Available in(http://www.aporrea.org/endogeno/n63341.html, 2005). Retrieved September
19, 2005.
Jagua, Elías. (2005). Chávez Announces Expropriations of Closed Companies. Available

in(http://www.aporrea.org/endogeno/n63341.html, 2005). Retrieved September 19, 2005.
Koutsoyannis, A. (1979). Modern Microeconomics. 2nd ed. New York: Macmillan.
Marx, C. and Engels, F. (1973). Selected Works. Volumes. IV to VII. Buenos Aires:
Sciences of the Man.
Miller, L. (1993). Microeconomics. Mexico: McGrawHill.
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Electronic Scientific Magazine Management Sciences / Scientific e-journal of
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Date / Citation:
JAVIER AGOSTINI (2011) MONOPOLY AND OLIGOPOLY: CAUSES
OF ENTERPRISES CLOSED IN VENEZUELA. A CASE STUDY IN THE
ZULIA STATE. GROUP SIDEPRO
Miller, R., Miller, L. and Meiners, R. (1990). Microeconomics, Mexico:

McGraw Hill.
Nicholson, W. (2001). Intermediate Microeconomics and its

Applications. Bogotá: McGraw Hill.
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Economy. Madrid: Prentice Hall.
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CRDI. pp. 91-116
73
POINTS OF APPLICATION IN CIVIL
ENGINEERING
1. Monopoly power and profitability depend, in part, on how firms interrelate. If the
relationship is cooperative rather than competitive, firms can charge prices well above
marginal cost and make large profits.
Rta/: Se relaciona de una forma negativa para la ingeniería civil ya que, por
ser una profesión tan amplia, al formarse grupos o asociaciones que quieran
monopolizar la valorización profesional, devalúa y afecta a aquellos que son
externos a estos círculos profesionales como trabajadores auxiliares o
independientes, generando un alto impacto social.
2. When there is a leading company in the market, it sets the price and conditions of the
offer that are accepted by all the others without the need for negotiations.
Rta/: Se relaciona con la ingeniera civil, teniendo en cuenta que en este campo se
maneja un régimen estandarizado para la proyección y realización de una obra; ya
que la financiación de estas es mas controlada con precios y condiciones fijados,
todo esto se ve de forma positiva por que no habrá cambios en variables como
análisis de costos, indicadores, presupuestos, durante la ejecución de un proyecto.
3. the exact application of science is achieved by improving the economies of nations

and the quality of life of the inhabitants to the extent that capital is profitable.
Rta/: Tiene una relación directa con la ingeniería civil, ya que las obras de
ingeniería, juegan un papel importante dentro del crecimiento de una
economía; y debido a esto la sociedad puede lograr un nivel de desarrollo
sustentable.
4. The market is not the one that determines the economic policy of a nation only, it is
the needs of a population and its inhabitants.
Rta/: la ingeniería civil se ve relacionada directamente, teniendo en cuenta
que es la encargada de crear soluciones a problemas pertinentes y tiene
como meta la transformación de algunos elementos para el uso del hombre,
contribuyendo con e desarrollo del medio, mejorando las condiciones del
entorno y transformando productivamente los recursos materiales y
humanos.
74
5. It is the Consumer Individual who demands the agent to be able to produce and offer
the goods and services that make and are part of life on this planet.
Rta/: lo anterior se relacionan con la ley de oferta y demanda, conocida
como un principio básico de la economía de mercado, teniendo en cuenta
que interactúan entre si fijando los precios y las cantidades de bienes y
servicios que se van a producir.
75

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MONOPOLY AND OLIGOPOLY: CAUSES

Strategic considerations intervene in economic decisions: Each

For Hugo Chávez Frías. (2005); President of Venezuela, it is contrary

economic competition of companies. The third part addresses the

THE MARKET STRUCTURE AND THE ECONOMIC

tomato, laundry detergent, packaged coffee, and pasta. However, the

The second type of market structure examined by many and in this

important to reveal some figures. Ten to twelve large companies,

This is the reason why many cartels tend to be unstable or short in

Other widely cited cases of great impact in Venezuela is that of the

it reflects the dark side of a contradictory reality hidden behind monopoly

• Total control of the offer of a product.

The logic of economic reasoning indicates that in these cases the

For a monopoly to be effective, there does not have to be any type of

monopolist, and there should not be the slightest threat of entry by

A monopoly company, like any other business, has to face two

Every company or company must adjust its production to maximize its

produce the quantity of goods sold. The level of production that

According to Harris, (1997), an oligopoly is called that market structure

periods of price stability. Producers simply compete by advertising their

Some characteristics that allow the oligopoly to be identified are:

The emergence of oligopolies leads to a reduced number of companies

So the oligopoly is a market in which a small number of suppliers

In Ecuador, on the other hand, the State found it necessary to introduce

In order to identify the differentiated goods according to Diego Saravia

Each one of the producers, since they produce a significant amount of

BALANCE OF THE MONOPOLIST AND OLIGOPOLIC

In an oligopoly, the market in which there is a small number of

Distribution of quotas or markets. Each company is assigned either an

your age or training, is considered by your competitors as an expert and

CRITICAL ANALYSIS ON THE CHRONOLOGY OF

Among the findings found during the development of the research on

• For the year 1998. The massive dismissal of approximately 700

So the intention of acquiring the complex was to close it down and

• The takeover by the former workers and the community began in

private property because the seizure process is attached to the law.

activity, conduct or agreement of individuals whose object is the

Among other Articles of the Constitution of the Republic, since there

Counting Venezuela with industrial plants that are capable of producing

rich in nature with aspirations to compete and introduce their products in

On the other hand, the case of co-management in closed companies

Businesses can make more money by colluding and agreeing to raise

The SIDERPRO complex is currently in the process of recovery, it has

It is worth highlighting, as part of the conclusions of this investigation,

It is necessary to end dependency, so we must fracture the

productive Venezuelan whose gravedigger was the neoliberal

Finally it is necessary to infer in the following: 4 The market is not the

Chávez Frías, Hugo. (2005). Chávez Announces Expropriations of Closed Companies.

Harris, N. (1997). Microeconomics. Mexico. Prentice Hall. pp. 226-350.

Available in (http://www.aporrea.org/endogeno/n63341.html, 2005). Retrieved September

Jagua, Elías. (2005). Chávez Announces Expropriations of Closed Companies. Available

Pindyck, R. and Rubinfeld, D. (2005). Microeconomics. Mexico: Prentice Hall. pp 350-420.

Saravia, D. (2003). Economyand Legal Status of the Software. Available in

Baye, Michael. (2006). Business Economics. Madrid: Ed. McGraw Hill.

Chávez Frías, Hugo. (2005). Chávez Announces Expropriations of Closed Companies.

Dominick, S. (1998). Microeconomics. Mexico: McGraw Hill.

Harris, N. (1997). Microeconomics. Mexico. Prentice Hall.

Jagua, Elías. (2005). Chávez Announces Expropriations of Closed Companies. Available

Koutsoyannis, A. (1979). Modern Microeconomics. 2nd ed. New York: Macmillan.

Miller, L. (1993). Microeconomics. Mexico: McGrawHill.

Miller, R., Miller, L. and Meiners, R. (1990). Microeconomics, Mexico: