Competition and antitrust: evaluation of regulatory barriers – Industria Legal

Foto de Ana Samudio, asociada de CorralRosales, más el logo de CorralRosales y un trozo de su último artículo en la revista Industria Legal


DATE: 24-08-2022


-Ana Samudio


Industria Legal

“The Superintendence of Market Power Control (SCPM by its Spanish initials) has analyzed regulatory provisions that could constitute regulatory barriers to entry and permanence in the market.” This is how Ana Samudio begins her latest article published in Industria Legal magazine, in which she addresses the issue of “evaluation of regulatory barriers” from the competition and antitrust standpoint.

As Samudio analyses in her article, “the Constitution recognizes the right of people to develop economic activities, individually or collectively, in accordance with the principles of solidarity, social and environmental responsibility; and the power of State intervention in economic activities to promote forms of production that ensure good living for the population and discourage those that violate their rights or the rights of nature”.

Therefore, this intervention is legitimate in the extent that a balance of these guarantees is achieved. In this way, any regulation that imposes restrictions on the entry and permanence of economic operators in the different markets must also be useful and sufficient, with the aim of always guaranteeing the public interest. They will also have to be reasonable and proportional, thus the development of efficient markets will take place.

Samudio concludes with the recommendations issued by the SCPM for the different markets:

  • “Hemp: the reasonableness of: (i) the norm that prevents natural persons from obtaining development licenses for activities associated with the production and commercialization of hemp has not been justified; and (ii) the norm that determines a minimum area for hemp cultivation; and the recommendations to the Ministry of Agriculture to review said regulations, so that the entry of economic operators in this market is not unjustifiably restricted.
  • Commercialization of automotive fuel: it was determined that the norm that requires an established network of -at least- 10 service stations to continue operating as a fuel distributor, has no technical support, therefore it constitutes an unjustified restriction to the number of economic operators that serve the automotive industry which harms competition. Consequently, it recommended the Agency for the Regulation and Control of Energy and Non-Renewable Natural Resources to remove this requirement.”

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Bill for the organic law on unfair competition

Edificio circular con un recuadro azul por arriba y otro blanco por abajo. Pieza que habla sobre el proyecto de Ley Orgánica de Competencia Desleal, y lleva el logo de CorralRosales, abogados de Ecuador
On January 18, 2022, the Superintendency of Market Power Control (“SCPM”) submitted to the National Assembly the Bill for the Organic Law on Unfair Competition (the “BoL”), with the aim of creating legal frameworks different for acts of unfair competition and for restrictive practices of competition, such as the abuse of market power and agreements between competitors. This is an important initiative, which derives from the recommendations made by the OCDE, in the face of the verification of a very high incidence of sanctioning processes for unfair practices compared to those derived from restrictive practices of competition within the SCPM. It seeks to refocus the resources of the competition authority in strengthening the promotion of investigations and studies of restrictive practices of competition, control of economic concentrations and promotion of free competition.

Unlike the Organic Law for the Regulation and Control of Market Power, which only prohibited unfair practices when “these prevent, restrict, falsify or distort competition, threaten economic efficiency, or the general welfare or the rights of consumers or users”, the BoL prohibits all unfair practices but limits the competence of the SCPM, to the judgment and sanction of those cases in which the unfair practice due to its seriousness and magnitude, not only affects the particular rights of economic agents of the market, but also the interests of public order and free competition. In these cases, the conduct is classified as an aggravated unfair practice, which contemplates penalties from 8% to 12% of the total income.

According to the BoL, cases of unfair practices that are not classified as aggravated will be resolved in the civil jurisdiction, through any of the following acts:

  1. Declarative action of disloyalty.
  2. Action to cease the unfair conduct or prohibit its future repetition. The prohibition action may be exercised if the conduct has not yet been put into practice.
  3. Action to remove the effects produced by the disloyal conduct.
  4. Action to rectify misleading, incorrect, or false information.
  5. Action for compensation of damages caused by unfair conduct.
  6. Preventive measures established in this law.

In cases of aggravated unfair competition, if the affected party chooses to initiate the administrative procedure, he or she may not exercise legal action, with the exception of compensation for damages.
Among other behaviors, the following are typified as unfair practices in the BoL:

  • Acts of confusion;
  • Acts of deception;
  • Misleading omissions;
  • Aggressive practices;
  • Acts of limitation;
  • Acts of denigration;
  • Acts of comparison;
  • Exploitation of the reputation of others;
  • Violation of secrets;
  • Induction to breach of contract;
  • Violation of regulations;
  • Abuse of situation of economic dependency;
  • Sale at a loss;
  • Unfair advertising;
  • Sales with pyramid scheme

The BoL also replaces the name of “Superintendency of Market Power Control” with “Superintendency of Economic Competition”. The administrative procedures related to the investigation and sanction of alleged unfair practices that have been initiated before the enactment of this law, the BoL provides that they continue to be substantiated and resolved until their completion, in accordance with the LORCPM.


Specialist in the Competition area
Ana Samudio, associate at CorralRosales
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.


Regulations issued by the superintendency for the control of market power

Three regulations were issued by the Antitrust Authority (“SCPM”) and published in the Supplement of Official Gazette No. 374.
1. Reform of the Guidelines for Administrative Procedures:
(i) Regulates the process of meetings that precede the mandatory filing for antitrust clearance of economic concentration operations, determining that the meetings will be recorded and do not exempt the applicant from submitting the notification within 8 calendar days after the conclusion of the agreement leading to the economic concentration operation.
(ii) It establishes specific times for analysis by the National Intendancy for Control of Economic Concentrations (in the investigation stage) and in the Resolution Board (in the resolution stage), both in Phase 1 (resolution within 25 business days following the declaration of completeness of the filing) or Phase 2 processes (resolution within 60 business days following the declaration of completeness of the filing).
(iii) Determines the criteria to be considered by the National Intendancy for Control of Economic Concentrations to evaluate the innocuousness of an economic concentration operation and based on this, the determination of a resolution in Phase 1 or Phase 2.
(iv) Regulates information requests and the sanctioning procedure applicable for infractions of the Organic Law for Regulation and Control of Market Power that do not constitute anticompetitive practices (for example: breach of duty to collaborate, non-delivery of information required in the times and form determined by the Antitrust Authority, or failure to comply with corrective measures).
(v) Modifies the disposition and evaluation of corrective measures regime. The most relevant change being that the implementation of corrective measures is not mandatory every time a sanction is imposed, but that these measures will be imposed only when they are deemed necessary to restore the market.
2. Guidelines for the identification and review of regulatory barriers
Regulates the procedure to be applied by the National Competition Advocacy Office for the identification and review of regulations that impose illegitimate or disproportionate restrictions/entry barriers. This procedure, which can only be initiated by the SCPM´s own decision, has a maximum duration of 90 days from the date when the start of the analysis is resolved.
The legal review is composed of two stages: (i) a legality analysis by which the authority´s competence to issue the regulation under review, and (ii) a review of the consistency of said regulation with the existing regulation considering the hierarchy of norms.
If the reviewed regulation passes the legal analysis, the reasonableness and proportionality of the restriction it imposes will be analyzed in the second stage, weighed against the protected legal asset: the public interest. For this analysis, its suitability, necessity, and proportionality in the strict sense must be determined.
If it is determined after these analyses that the reviewed regulation is illegal or that it imposes an unreasonable barrier to entry, the Antitrust Authority will propose to the issuing Authority its elimination or modifications aimed to correct the undesirable effects.
3. Comprehensive modification of the guidelines for the filing fee for review of economic concentration operations
Prior to this modification, the fee to be paid for the analysis of economic concentration operations was determined based on the financial statements of the immediately preceding fiscal year of the entity over which the change of control that gives rise to the economic concentration operation falls. It corresponded to the highest resulting value of the following alternatives:
  • 0.25% of income tax
  • 0.005% of total revenue
  • 0.01% of the asset value
  • 0.05% of equity
With the modification (i) the calculation method is simplified with the determination of a base fee that will be defined on a yearly basis by the SCPM, based on the real costs of the analysis of economic concentration operations and (ii) solves the inconvenience for operations submitted from January to April of each year, period in which there are no audited financial statements, by expanding the possibility of calculating the fee based on the financial statements of the second immediately preceding year.
The simplification of the calculation occurs as follows:
(i) Considers a scale for applying the base fee, which is applied only based on the income of the entity that bears the change of control that gives rise to the economic concentration operation:

(ii) Determines that the rate applicable to the analysis of economic concentration operations notified for information purposes (not mandatory filing) is half the base fee, regardless of the value of the total revenue.

(iii) Allows payment via wire transfer.

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DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.


Gestión Digital – COVID-19 and the limits of antitrust law



DATE: 28-04-2020


-Ana Samudio

The main objective of antitrust law is to ensure the existence of an equal playing field so that competitors have the same opportunity to offer goods and services to consumers in every relevant market. This initial budget necessarily implies the ban of agreements between competitors – any express or implicit agreement that reduces uncertainty about the behavior of a competitor – and the abuse of market power.

Within the framework of necessary and urgent measures to confront the world health crisis derived from the COVID-19 pandemic, several competition authorities have seen the need to relax – and even suspend – the sanctioning regime applicable to agreements between competitors, allowing exceptionally that these take place when temporary cooperation is necessary to guarantee the fair provision of essential goods and services during the crisis.

The first such announcement was from the Norwegian competition authority, which allowed, over a three-month period, coordination of itineraries between two local airlines to ensure the availability of the service. This announcement was quickly followed by regulators in Germany, England and the Netherlands, who relaxed the control regime for agreements between competitors aimed at guaranteeing the provision of goods and services; allowing competitors: (i) the exchange of information regarding availability, (ii) the cooperation necessary to keep the establishments open, (iii) the sharing of logistics of warehouses and transport; and (iv) the assignment / exchange of personnel to meet demand.

On its part, the European Competition Network (ECN), which groups the European Union’s competition authorities, issued a joint statement determining that, under current circumstances, reasonable cooperation between competitors would not constitute a restriction of competition in the terms of the community regulation and / or creates efficiencies in the production and distribution of goods and services that overweight the restriction that they could generate; and defined channels of attention to resolve doubts that operators may have about the legitimacy / illegitimacy of an intended cooperation, in light of these exceptional circumstances.

Likewise, the authorities in charge of the control and judgment of competition matters in the United States of America -Department of Justice and Federal Trade Commission- have created an expedited procedure -with duration of seven (7) calendar days- for the analysis and authorization of cooperation between competitors. The entire process is carried out online, for which operators interested in cooperating must provide information that demonstrates the relation with the crisis, necessity, and reasonability of the cooperation, under the protection of the crisis unleashed by the pandemic.

In Colombia, an exceptional regulation was created by which the Logistics and Transportation Center, created as an independent entity from the competition authority, has the mission of evaluating and approving agreements between competitors that are intended to generate efficiencies in the logistics and cargo transportation market which would be deemed illegal at any other time.

Along with these measures that make the system applicable to agreements between competitors more flexible, several authorities have stressed the importance of guaranteeing the provision, at fair and competitive prices, of products considered essential to protect the health and life of consumers (such as respirators, masks and disinfectant products), while warning that the operators that abusing their market power to affect this guarantee will merit a swift and hefty sanction. Along these lines, the Superintendence of Control of Market Power in Ecuador has issued two warrants to producers and sellers of these goods, reminding them that, according to the Organic Law of Regulation and Control of Market Power, they cannot take advantage of the emergency to increase their profit margins through unjustified price increases and will remain vigilant and implement the necessary control actions to preserve consumer rights and free competition.

In the first of the warrants, the Superintendent of Control of Market Power stated, that “Any variation in prices must obey the dynamics of the market and the individual and independent decisions of economic agents and not to anti-competitive agreements or union recommendations.” This assertion -which a priori would be contrary to the affirmative actions taken by competition authorities from other jurisdictions that were explained above- applies to the anticompetitive price-fixing agreements and not to the fair temporary cooperation between competitors aimed to benefit the consumers and tends to guarantee the supply  in this delicate estate of emergency, under the exemption to the prohibition provided in article 12 of the Organic Law of Regulation and Control of Market Power, which in the present state of affairs would justify cooperation between competitors when the following conditions are met simultaneously:

  1. Consumers or users be allowed to participate equally in their advantages: The purpose of cooperation would be to guarantee the provision of goods and services during the state of emergency, with which this condition would be fulfilled.
  2. That they do not impose restrictions that are not indispensable for the achievement of those objectives: Any intended cooperation must be strictly limited to measures required to meet the objective.
  3. That they do not grant economic operators the possibility of eliminating competition with respect to a substantial part of the products or services contemplated: The terms of the cooperation must not constitute barriers of entry or permanence of other competitors in the market.

If you want to read this article in Spanish, click here

Implementation of an expedited merger control procedure by the Superintendence of Market Power Control


On April 20, 2020, the Antitrust Authority issued an abbreviated analysis and control procedure applicable to certain combination transactions.

This expedited procedure, also known as fast-track, is common in most jurisdictions that have an antitrust merger clearance process and generally apply to transactions that either (i) do not imply any change in the market structure – such as a change of control of a local business in favor of a foreign acquirer with no prior participation in the Ecuadorian market-; or, (ii) in which,  a priori, the market power resulting from the operation is not significant enough to allow unilateral anticompetitive/abusive behaviors by the combined operator.

The analysis and resolution within a fast-track process must be completed within 25 business days. This term contrasts with the regular process that usually lasts between 4 and 14 months (when remedies apply).

The fast-track process is applicable to the following 6 scenarios:

  1. When the change of control of the business occurs in favor of a foreign economic operator with no prior economic activity in Ecuador.
  2. In horizontal combinations (transactions between competitors) where the joint market share of the economic operators involved in the transaction and of their affiliate entities -when applicable- is less than 30% in each relevant market affected by the transaction.
  3. In horizontal combinations that occur in markets where the Herfindahl-Hirschman index (HHI) before the combination is less than 2,000 points and, as a result of the transaction, the HHI index variation is less than 250 points.
  4. In vertical combinations (transactions between operators in the same production/marketing chain), where the joint market share of the economic operators involved in the transaction and of their affiliate entities -when applicable- is less than 30% in each relevant market affected by the transaction.
  5. In vertical combinations where the Herfindahl-Hirschman index (HHI) of each of the vertically integrated markets post-merger is less than 2,000 points.
  6. In transactions involving one or more economic operators that are at risk of bankruptcy, duly supported and qualified by the Antitrust Authority.

The implementation of the fast-track processis highly positive to facilitate new business opportunities, particularly involving foreign investors. In addition, it contributes to the timely application of the competition regulation in the scope of merger control during the state of emergency deriving from Covid-19.


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DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.