Fair Prices Act

BENSON, PEREZ MATOS, ANTAKLY & WATTS

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Caracas, November 16, 2015

Executive Decree N° 2,092 with Rank, Value and Force of

Master Act Governing Fair Prices

The new Master Act Governing Fair Prices was published in Official Gazette No. 6,202, Special Issue, dated November 8, 2015. The purpose of the Act is to establish the rules for setting the prices of goods and services, the profit margins, the marketing mechanisms, as well as the controls to guarantee fair prices. The Act provides a legal basis to Administrative Directive No. 70 issued on October 27, 2015 by the Office of the National Superintendent for the Defense of Socio-economic Rights (SUNDDE, after the Spanish acronym), which is the governing body for establishing, setting and marking the prices of goods and services marketed in this country and about which we sent a Flash Report. Official Gazette No. 40,787 dated last Thursday, November 12, published an Official Notice of the Office of the Vice President of the Republic that corrects a material error in article 46 regarding the Violations pertaining to Failure to Comply with Formalities. The correction of the material error consists in including three new punishable items, those being: a) Failure to display on the shelves or other means of information to the public the products available in storage; b) Selling or offering to sell goods at prices higher than the ones that should be marked or published; and c) Failure to produce the invoice, the waybill or similar document to prove the lawful origin of the goods.

The new wording reproduces almost exactly the rules of the revoked law, restructuring the placement of some of them and making some changes of form. The bulk of the amendment focuses on penalization. We should mention that the rules mentioned below were not reproduced in the new wording:

  1. The declaration of all goods and services required for the production, manufacturing, storage, transportation, distribution and marketing of goods and the rendering of services as being for the Public Good.
  2. The obligation to identify by means of a label the goods bought or produced with foreign currency assigned by the Republic was removed, as well as that of a Performance Bond by whoever receives the foreign currency. However, the SUNDDE is granted a broad role in cooperating with the agency in charge of supervising and controlling the proper use of foreign currency assigned pursuant to the official mechanisms for the administration of foreign currency, as well the setting of prices of goods and services involving foreign currency. The new law provides that failure to place the notices required in the area of foreign exchange control is a violation.
  3. The powers of the three Intendant’s Offices that make up the SUNDDE shall be set by the Internal Regulations. The SUNDDE is no longer a part of the Office of the Vice President of the Republic and it will be announced in a decree which entity the SUNDDE will report to.

As mentioned earlier, the most important aspect of the new law is the emphasis on penalization, increasing sanctions and penalties, and includes a new offense, as well as the redefinition of another already provided for in the revoked law.  Below is a summary of the highlights:

  1. Criminal liability is expanded.  In addition to comprising the liability of partners, the supervising bodies, the administration, management, the operating and controllership personnel of companies, it includes the mass media, web sites and other advertising means, that shall be jointly and severally liable before the Venezuelan courts of law for the crimes committed by the companies they represent.
  2. The offense of profiteering includes the buyer in addition to the seller of goods or products or those rendering services, for a profit, at prices or margins of profit or of intermediation higher than those set by the SUNDDE or those marked by the producer or importer.  The penalty of imprisonment is 8 to 10 years. Also provided for is the temporary takeover of establishments for up to 180 days, that may be extended, and a fine between 1,000 and 50,000 Tax Units.
  3. Special mention is made of the offense of hoarding when it is committed by special taxpayers, who shall be penalized with a fine of up to 20% calculated on the value of the net annual income when there are aggravating circumstances. The penalty of imprisonment is 8 to 10 years.
  4. The penalty of imprisonment for boycotting is now increased from 10 to 15 years; also, there is a provision similar to the one mentioned above for special taxpayers.
  5. The offense of Reselling Products refers to products of the basic food basket or regulated products that are sold for a profit at prices higher than those set by the government or by the guidelines for setting prices.  The penalty of imprisonment is from 3 to 5 years and a fine of 200 to 10,000 Tax Units.
  6. The penalty of imprisonment for the offenses of usury and usury in financing transactions was increased from 5 to 8 years.
  7. The new offense is the Fraudulent Dissemination of Prices, applicable to those who disseminate, by any means, false news, or make use of violence, threats, deception of any other kind of scheming to alter the actual value of the elements that are part of the setting of prices.  The penalty of imprisonment is from 2 to 4 years.
  8. The offense that was redefined is Fraudulent Tampering with Prices. This offense refers to those who, directly or indirectly, by deception and for a profit, were to apply or inform, by any means, an exchange rate other than the one set by the National Executive, for estimating the prices of goods and services in the national territory, and shall be penalized with imprisonment from 8 to 10 years.

Yours truly,

BENSON, PÉREZ MATOS, ANTAKLY & WATTS

Lubín Chacón G.

All rights reserved. This work is a contribution of BENSON, PEREZ MATOS, ANTAKLY & WATTS to its clients on legal topics of their interest for purposes of providing orientation. It must not be interpreted as a specific legal opinion.

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