The Executive Decree No. 8.331, witch enacted the Decree with force of Law for Just Costs and Prices, was published in Official Gazette No. 39.715 dated July 18, 2011 (herein the “Just Costs Act”). Said Act, seeks to put a stop to what it considers to be, in the words of its own motivation, the “excessive earnings” that exist in the Venezuelan market, aiming to determine the costs and prices of all goods and services offered to the public in Venezuela and therefore controlling the hole commercial activity of the country, except for the financial institutions, which are expressly excluded.
The obligations and restrictions to individuals, set forth by the Just Costs Act will entered into force November 22, 2011, although regulations regarding the creation of the national authority that will be in charge of the execution of said Act, as well as the system that will be used, did entered into force the day the Act was published.
Among the obligations that the Just Costs Act establishes, is the one that obliges every individual subject to said Act to register before the National Costs and Prices Registry, as well as providing the national authority with all the information needed to determine the prices of all of their products or services (cost structures), in order for it to authorize said prices, except when the prices are already regulated by the State or when individuals, before the Act came into force, notified the national authority of the prices they have been charging for their goods and services and said authority does not revoke them. In subsequent regulations, the national authority has clarified that the registration process will be a progressive one, for example by types of products, as has been the case up to this point.
The Just Costs Act, remained silent regarding the way, techniques and the parameters that are going to be used to determine the costs and prices, said rules will have to be enacted through executive regulations, and the specific regulations that are sure to come from the national authority that will be in charge of executing the Just Costs Act. Up to this point, the only regulations that have been made public are the ones regulating the procedure to register before the national authority. This aspect has the business sector of the country immersed in situation of uncertainty.
Therefore, the national authority competent in this matter will be able to enact general regulations, regulations specific to sectors or categories of products or services and even regulations for specific goods or services, through which the price and earning margins considered to be “just” will be determined.
In accordance with all the recently enacted legislation in Venezuela, the Just Costs Act established very burdensome preemptive measures and sanctions.