27 January 2014
In the Official Gazette N° 40.340, dated January 23rd, 2014, the Decree with Force of Law of Fair Prices (the “Price Law”) was issued, entering into force on the same date.
The Price Law eliminates the National Superintendency of Fair Costs and Prices (in Spanish “SUNDECOP”) and the Institute for the Defense of People’s Access to Goods and Services (in Spanish “INDEPABIS”) and establishes a set of binding rules for all entities that develop economic activities in the country. Among the most important aspects of the Law are:
1. Purpose: To ensure economic development through:
- Determining the fair prices of goods and services,
- Fixation of the maximum percentage of profits,
- Ensuring access for people to goods and services,
- Effective control of economic and commercial activity and
- Establishing new illegal administrative offenses, economic offences, their respective penalty and the compensation for damages suffered.
Among the purposes of the Price Law are: the consolidation of the socialist economic order, embodied in the “Plan Patria”; to increase the standard living of the Venezuelan people; to set the criteria in the regulations that affect costs; benefiting the domestic production of goods and services; to attack the adverse effects resulting from monopoly, oligopoly, cartels and other practices as determined by the National Executive.
2. Subjects of application: Natural and legal persons, of public or private, national or foreign law, that develop economic activities in the country, including those made electronically. Exceptions are provided to people whose activities are governed by special laws.
3. Public Order: The provisions of the Law are of public order and inalienable. The operations among particulars that do not affect public interest may be the subject of amicable settlements.
4. Declaration of Public Utility: It is declared of public utility all goods and services required for the production, manufacture, storage, importation, commercialization, distribution and transportation of goods and the provision of services.
5. Expropriation: An expropriation procedure may be initiated in case of committing economic and administrative offenses. The amount of the fines, penalties and damages caused will be reduced from the amount to be paid as expropriation’s compensation.
6. Temporary Occupation, Seizure: Temporary occupation measures can be taken or a seizure of property while carrying out the expropriation process (immediate possession of the property, facilities and assets proceed). During the term of the temporary measure, workers will continue to receive payment of wages and other labor rights.
7. Currency: The currency assigned by the State shall be strictly supervised. A performance bond contract shall be subscribed with the indication of the obligation to comply with the objects and purposes for which foreign currency is requested, as well as the consequences for non-compliance.
8. Product Identification: The property acquired or produced with foreign currency allocated by the Republic shall be identified with a label designed to inform the consumer about the origin of the currency.
9. National Superintendency for the Defense of Socio Economic Rights (in Spanish “SUNDDE”): The SUNDDE is created and is attached to the Vice President of the Economic Government, and it may, among others,, establish the maximum rates of production or import brands. It will be able to establish the binding criteria for determining fees and prices. It can issue certificates of fair prices, to execute audit procedures, to supervise and control, to set general conditions of the offer, promotions and advertising.
10. Register of individuals or entities that are engaged in Economic Activities (in Spanish “RUPDAE”): The SUNDDE will have a Record of individual and entities Developing Economic Activities (“RUPDAE”).. They must register all subjects that fall under the application of this law, and the registration is essential to exercise economic activities in the country. It is a 180 days period to register in the RUPDAE.
11. Determination of Rates: The SUNDDE will determine, monitor and shall set the prices of goods and services. It will establish the categorization of goods, services and subjects; it may dictate the parameters to set fair prices. Sources of information are set for determining the price.
12. Maximum Profit Margin: The maximum profit margin will be set annually by the SUNDDE. In no case, the profit margin of each participant in the supply chain of commercialization can exceed 30 percentage points in the cost structure of the good or service. It may be determined the maximum profit margins by sector, category, geographical area, marketing channel, economic activities or any other concept. The absence of an express determination of the maximum profit margin does not imply the breach, omission or relaxation of previously established prices by the National Executive.
13. Certificate of Fair Prices: To manage the acquisition of foreign currency and any other procedure established by the National Executive, it will be required a certificate issued to the subjects of application of this Law once they have demonstrated to the SUNDDE compliance criteria of fair prices, whether or not the prices there were already fixed.
14. Penalties: The following penalties are established:
- Fines, calculated in Tax Units (in Spanish “UT”)
- Temporary suspension from the RUPDAE.
- Temporary occupation with the intervention of stores, warehouses, industries, commercial establishments, transportation of goods up to 180 days.
- Temporary closure of stores, warehouses or establishments dedicated to commercialization, conservation, production storage, production or processing activities up to 180 days.
- Closing stores, warehouses and establishments dedicated to commercialization, conservation, storage, production or processing activities.
- Asset forfeiture.
- Revocation of licenses, permits or authorizations and, in a special manner, the ones related to access of foreign currency.
15. Preventive Measures: During the audit process a series of preventive measures may be issued such as: Confiscation of goods, temporary occupation and / or closure of the establishment, immediate adjustment of prices of goods or services, and any other measures necessary to prevent infringement rights of citizens.
16. Generic Offenses: The subjects of application of this Law will be punished by a fine between 200 and 5,000 UT, specifically the ones that do not provide the necessary assistance, does not supply necessary information, unwarranted appearance or not complying with the orders or directions of the SUNDDE. In case of recurrence in these offenses, the subjects shall be punished by 10,000 UT plus closing warehouses, or establishments up to 90 days.
17. Rights of Persons: They will be punished with a fine between 200 and 20,000 UT, the ones that violate, impair, are unaware or avert the people from exercising their rights
- Provision of adequate, timely and accurate information about the goods and services made available for information.
- The promotion and protection of their legal rights and economic and social interests in the transactions made, by any means or technology.
- The reposition of the goods or compensation for damages.
- The protection against false advertising and propaganda, false, misleading, subliminal or with coercive methods.
- Non-discrimation by the providers of goods and services.
- Protection in adhesion contracts that are disadvantageous or affect their rights and interests.
- The protection in credit transactions.
- Remove or withdraw the complaint and conciliation in matters of interest, providing they do not affect collective interests.
- A willingness and enjoyment of goods and services, in a continuous form, fair, efficient and uninterrupted.
- Other rights that the Constitution and other current legislations establish.
18. Sale of foodstuffs and goods that are due or damaged: The penalty will be a fine between 200 and 10,000 UT.
19. Speculation: The sale of goods or provision of services to exceed fixed prices shall be punished throughout Judicial via with imprisonment from 8 to 10 years. They shall also be punished with temporary occupation of the warehouse or facility up to 180 days, and a fine between 1,000 to 50,000 UT.
20. Importation of Goods Harmful to Health: Punished by imprisonment between 6 to 8 years.
21. Stockpiling: The punishment is imprisonment between 8 to 10 years and a fine of 1,000 or 5,000 UT, and in case of recurrence, it will precede the closing of the store, warehouse or establishment.
22. Unfair Conditions: A prison sanction is established between 2 to 6 years and a fin between 500 to 10,000 UT. The recurrence will be sanctioned with temporary occupation of the property for 90 days.
23. Extraction Contraband: Diverting basic necessities of its authorized destination or attempting to remove regulated goods by SUNDDE, whose sale has been defined to the national territory, shall be punished with imprisonment between 10 to 14 years.
24. Usury: Obtaining notoriously disproportionate benefits to the workfare (service rendered) is punishable with imprisonment for 4 to 6 years. The Law also refers to Usury Financing Operations, having to do with credit sales of goods or services relating to financing interest, fees or extra charges from those set by the Central Bank of Venezuela. In this case the penalty shall be imprisonment from 6 months to 2 years.
25. Leasing of Real State: The same penalties of Usury will apply to the owners of commercial locations that set higher fees, than the limits established by the SUNDDE, as well as establishing other unauthorized fees or expenses.
26. Liability of Partners: The partners, members of the management bodies, administrative, management and monitoring Entities, will be personally responsible when its demonstrated that the crimes were committed under their knowledge or approval.
27. Repeal: The Law of Fair Costs and Prices is repealed, as well as the Law for the Defense of People’s Access to Goods and Services.
28. Validity: Once published in the Official Gazette. From January 23rd, 2014.
This report presents a general description of the relevant and general aspects of the Law of Prices and does not constitute a legal opinion directed to address a specific situation. In case of doubts or comments or for further information please contact Juan José Delgado [email protected] or María Cecilia Rachadell [email protected]