Argentina's Senate on Thursday passed a bill sponsored by President Cristina Kirchner that would empower her government to regulate prices and production to combat high inflation, drawing sharp objections from the private sector.
The Senate voted 38 to 27 to pass the bill, which must still be passed by the lower house to become law.
The Chamber of Deputies, where Kirchner's supporters also hold the majority, was expected to take up the measure in two weeks.
The bill empowers the government to set "profit margins, reference prices as well as maximum and minimum prices for the provision of indispensable goods and services."
It targets large producers, exempting small and medium-size enterprises that "do not have a dominant position in the market place."
Product shortages and unjustified price increases could draw sanctions and fines under the bill, although the government must get court approval for prohibitions or temporary closures.
Representatives of Argentina's private sector said they would challenge the measure as unconstitutional if it is approved.
"We regard it as unconstitutional because it delegates extraordinary power to the executive, and is not in line with the free exercise of industry and commerce," Jose Urtubey, vice president of the Argentina Industrial Union, said in a radio interview.
The government is seeking the additional powers as it grapples with annual inflation of over 30 percent, and an economy on the brink of recession.
Adding to the economic uncertainties, Argentina is currently locked in a legal impasse in the United States over debt payments that has forced it into default for the second time since 2001.
The Senate passed a separate bill early Thursday designed to enable Argentina to circumvent a US court order blocking payments on its restructured, heavily discounted 2001 debt unless it also pays hold-out creditors in full.
The bill would authorize making those payments from Buenos Aires or Paris, instead of New York.
The holdouts have vowed to fight the move legally, suggesting they would seek to have creditors who take the payments declared in contempt of the US court.
"It's in a blatant violation of the court orders. The court order prohibits the change of the payment mechanism on the exchanged bonds without court approval," Robert Cohen, lawyer for NML Capital, told AFP.
"It looks like Argentina has chosen to ignore that and we will be taking appropriate steps to do whatever is available to us in the US courts to be sure that that plan will not be implemented and that any third party who thinks it might be appropriate to participate in that exchange realizes that they may well be held in contempt of court doing so."