The Decree with the Rank, Value and Force of Law on Fair Costs and Prices (the “Decree-Law”) was published in Official Gazette No. 39,715 of July 18, 2011. The vast majority of its provisions will come into force after the expiration of ninety (90) working days from the publication of the Decree-Law in the Official Gazette.

Following are the most important aspects of the Decree-Law:

1. Object

The Decree-Law sets forth the regulations, as well as the various administration and control mechanisms, needed to maintain the stability on the prices and promote the access to goods and services to all people on equal terms within the framework of an economic and social model which asserts the interests of the people and not of the capital.

2. Scope

The provisions of the Decree-Law are applicable throughout the national territory, and to the relations between public or private law subjects that, with occasion of their line of business, production or delivery of services, determine the prices that apply to the sale of goods or performance of services, as well as the inherent costs in such operations.It should also be noted that the Decree-Law applies to all individuals and legal entities of public or private law, whether domestic or foreign, that during the course of their activities within the country, produce, import or market goods or provide services for which they receive monetary compensation to satisfy their exchange.

The regulations contained in this Decree-Law are applicable even when the prices of the products marketed are subject to regulation by the State. On the other hand, it should be noted that banks and financial institutions subject to the supervision of the Superintendence of the Institutions of the Banking Sector are exempted from the application of this Decree-Law.

3. Purposes

Among the most important purposes of the Decree- Law, we must highlight the following:

a) Establish prior control mechanisms to those companies whose earnings are excessive in proportion to the cost structures of the goods they produce or market, or the services they provide.

b) Identify the economic agents that due to the performance of their services or product sales, set excessive prices.

c) Fixation of fair trade criteria.

d) Promote the implementation of fair prices through mechanisms that allow making costs and expenses more sincere.

4. Obligation to register

The subjects bound by this Decree-Law shall register and keep their data updated in the National Register of Prices of Goods and Services, which will be under the responsibility of the National Superintendence of Costs and Prices (the “Superintendence”). In this regard, it is noteworthy that the Vice-President and/or the Ministers may require the compulsory registration for the purposes of completing administrative formalities and obtaining authorizations or benefits from the National Executive.

5. Categorization of goods and services

The Superintendence may establish the categorization of goods and services, or of subjects, taking into account technical criteria it deems convenient, and it may establish different regimes for regulated, controlled or not subject goods and services, due to the strategic character of such goods and services and for the benefit and protection of the citizens who acquire them.

6. Determination and modification of prices

Additionally, the Superintendence shall determine and modify the prices on which the Integrated National System of Costs and Prices will be governed. In this regard, the prices embodied in such System will be considered determined or modified when:

a) The individual or legal entity has determined such prices prior to the effectiveness of the Decree-Law, duly and timely reporting them to the Superintendence, and without such office subsequently modifying them.

b) Such prices have been fixed by an act issued by the competent agencies or entities, in the case of goods or services subject to price regulation by the National Executive.

c) The Superintendence, on the basis of the information provided by the subjects of the Decree-Law, and in accordance with the provisions of such Decree-Law, proceeds to determine the fair price of goods or services, or modifies such fair price, either ex officio or following a request of the party concerned. Notably, the Superintendence may establish the obligation on the subjects to display in their price lists, or in the marking of products, a statement indicating that the prices have been registered, determined or modified.

7. Price components

In order to determine the fair value of the goods and services, the Superintendence may base itself on the following:

a) Information provided by the subjects, either at the request of the acting entity, or gathered from other entities of the Public Administration that had it available. Such information must be in accordance with the structure of direct and indirect costs, overhead expenses,management, distribution and sale costs when appropriate, as well as the expected profit based on the expectations and risk assumed.

b)Elements due to their connection with the case submitted to consideration to determine the fair price of a certain good or service, make merit to be considered for the determination of the aspects that make up the price, or its cost.

8. Inspection and supervision powers

The Superintendence will have the broadest powers for inspection and control in the exercise of the powers granted by this Decree-Law, or those assigned to it by applicable laws. The subjects of the Decree-Law, and their representatives, are required to provide to the staff responsible for the inspections and supervisions, all the collaboration they request.

9. Sanctions regime

Individuals who fail to comply with their obligations under this Decree-Law may be subject to penalties, which could include a fine, temporary closure, or temporary disqualification from the exercise of trade, their activity or profession.

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