1 Legal and enforcement framework
1.1 Which legislative and regulatory provisions regulate dominance in your jurisdiction?
The Organic Law for the Regulation and Control of Market Power (LORCPM) of 13 October and its Regulation of 7 May 2012 contain the relevant legislative and regulatory (ie, secondary legislation) provisions, respectively. There is also a non-binding Guide for the Investigation of Abuse of Market Power, issued by the Superintendence for Market Power Control (SCPM) in August 2021.
Articles 7 and 8 of the LORCPM define the concepts of 'dominance' and 'market power'. Article 9 of the LORCPM defines the concept of 'abuse' and contains a non-exhaustive list of types of conduct that may be characterised as abusive.
Articles 8 and 9 of Decision 608 of the Andean Community define the concepts of 'abuse' and 'dominance', respectively. Decision 608 applies whenever there is conduct which has effects in more than one member state.
Both the domestic and regional (Andean) rules of abuse of dominance are largely modelled on EU competition law and are frequently interpreted in light of European case law.
1.2 Do any special regimes apply in specific sectors?
1.3 Is the legislation intended purely to protect economic interests or does it have other aims?
Article 9 of the LORCPM prohibits abusive conduct by a dominant undertaking that may have the effect of "distorting competition" or "adversely affecting efficiency or the general welfare". Nonetheless, Article 9 of the LORCPM must be interpreted in light of Article 1, which refers to the "establishment of a social, solidary and sustainable economic system", along with "efficiency" and "general and consumer welfare", as the goals of the LORCPM. Furthermore, Article 4 of the LORCPM sets out the guiding principles that should be followed in the enforcement of the LORCPM. Among other things, Article 4 refers to:
- the "pursuit of deconcentration";
- the "right to economic freedom";
- the "equitable distribution of the benefits of development"; and
Article 4 of the LORCPM Regulation sets out the general criteria for the evaluation of anti-competitive conduct forbidden by the LORCPM and largely reproduces the abovementioned concepts pertaining to the aims of the law. It is doubtful whether the recent reforms to the LORCPM Regulation of 28 September 2022 – which purport to establish a hierarchy of goals within Ecuadorian competition law whereby consumer welfare becomes the preferred standard of evaluation for allegedly anti-competitive behaviour – are compatible with Articles 1 and 4 of the LORCPM. In other words, the preference of consumer welfare over deconcentration (ie structural concerns) and economic freedom seems unjustified and illegal, and may be incompatible with the normative structure of the LORCPM.
1.4 Which authorities are responsible for enforcing the legislation?
The SCPM is the national administrative agency designated by the LORCPM for its enforcement. Contentious-administrative tribunals have jurisdiction to hear annulment actions on the grounds of illegality defects (ie, breach of the LORCPM) in SCPM decisions. Civil tribunals have limited jurisdiction to hear follow-on damages claims, in the sense that civil claims can proceed only after there has been a final or unappealable administrative decision. There are no standalone civil damages claims in Ecuador.
1.5 How active are the enforcement authorities in taking action against abuse of dominance in your jurisdiction? What key decisions have the enforcement authorities adopted most recently?
The SCPM is not very active in investigating and enforcing the abuse of dominance provisions (Article 9 of the LORCPM). Three key decisions were handed down by the SCPM in 2022: Banred, Sayce and Egeda.
Banred is the dominant undertaking in the domestic automated teller machine interbank network market. Pursuant to a complaint filed by a rival network operated by the country's cooperative and mutual financial entities (ie, building societies), Banred was fined for abuse of its dominant position by foreclosing access to the relevant market by disproportionately increasing interconnection tariffs, as well as engaging in exclusionary behaviour through raising its rivals' costs. Banred was also found to have engaged in abusive discrimination towards the complainant.
Sayce and Egeda are companion cases since both were initiated by the same complaint, filed with the SCPM by the Ecuadorian Telecommunications Companies Association. Sayce is a collective management society for music copyright owners; while Egeda is a collective management society for audiovisual production copyright owners. In essence, the complaint alleged that both Sayce and Egeda had engaged in excessive pricing regarding the royalty charges to which they were entitled pursuant to Ecuadorian IP law. While Egeda succeeded in its defence and fended off the charges, Sayce was found to have abused its dominant position.
2 Definitions and scope of application
2.1 What parties are covered by the dominance legislation? Are any exemptions available?
Any parties – whether private or state owned, domestic or foreign – are covered by the dominance legislation if their conduct has actual or potential effects within the Ecuadorian territory.
Article 6 of the Organic Law for the Regulation and Control of Market Power (LORCPM) Regulation expressly excludes any general exemptions regime for abusive conduct by dominant undertakings. However, Article 28 of the LORCPM allows for the establishment of concrete exemptions through secondary legislation where this is necessary for:
- the development of a national monopoly in the public interest;
- the development of strategic sectors of the economy or public services; or
- the technological and industrial development of the national economy.
2.2 How is 'dominance' defined in your jurisdiction?
Article 7 of the LORCPM defines 'dominance' as the capacity to exercise significant influence in the market. It is further defined as the capacity to behave independently from competitors and trading counterparts.
2.3 How important is market share in assessing dominance in your jurisdiction? Do specific thresholds apply in this regard?
Market share is a very important factor in assessing dominance. For instance, in the final decision in Superintendence for Market Power Control (SCPM) Decision SCPM-CRPI-001-2022 of 11 May 2022 (Banred), market share (88%) was the most significant criterion in finding that Banred had a dominant position (para 544). The relevance of a particular market threshold is affected by other factors that are also considered by the SCPM in establishing market power within the relevant market. The SCPM is unlikely to establish a presumption of dominance in cases where the allegedly dominant undertaking has a market share below 50% (Banred, para 387).
2.4 What other factors are considered when assessing dominance?
Other factors, apart from market share, may be considered when assessing dominance. These criteria, which were expressly applied in Banred, are as follows:
- percentage of total market revenue;
- the Herfindahl-Hirschmann market concentration index;
- barriers to entry; and
- network effects (Banred, paras 487-543).
2.5 How are the product and geographic markets defined in your jurisdiction?
Specific secondary legislation on market definition was issued in November 2016 ('Market Definition Regulation').
The definition of product markets is governed by Articles 5 to 19 of the Market Definition Regulation. For the purposes of market definition, the first step involves an analysis of demand-side substitutability, where the following economic tools may be used:
- the small but significant non-transitory increase in price (SSNIP) test;
- demand-side price elasticity;
- demand-side cross-price elasticity; and
- price correlation analysis.
The second step involves an analysis of supply-side substitutability and potential competition, where the following economic tools may be used:
- the supply-side substitutability test; and
- the near-universal substitutability test.
There may be subsequent steps, where factors such as the following may be considered:
- secondary markets (pertaining to products or services that are designed to complement the products or services under investigation);
- consumer preferences; and
- product seasonality.
The definition of geographic markets is governed by Articles 20 to 26 of the Market Definition Regulation. For the purposes of market definition, the following economic tools may be used:
- the SSNIP test;
- demand-side price elasticity;
- demand-side cross-price elasticity;
- price correlation analysis;
- the Elzinga-Hogarty test;
- transport cost analysis; and
- the isochronous test.
Consumer preferences may also be considered.
2.6 Does the dominance legislation make any distinction between dominant purchasers and suppliers?
The distinction between dominant purchasers and suppliers has been made in specific cases, but the distinction itself is not altogether clear in the legislation itself. For instance:
- Article 7 of the LORCPM, which establishes the basic criteria for assessing dominance, contains explicit references to undertakings that can behave independently of their suppliers; and
- Article 9.23 of the LORCPM refers to a modality of abuse involving the imposition of unfair commercial conditions or excessive and unfair payment terms on suppliers.
The doctrine of abuse of economic dependence was introduced into Ecuadorian law by Article 10 of the LORCPM. Strictly speaking, this type of abuse is a different creature from abuses of dominance. Modelled on the law in countries such as France and Germany, this provision is specifically designed to protect suppliers from commercially powerful buyers. In other words, the idea of bargaining power (which originates in contract law) takes precedence over the idea of market power (which originates in microeconomics). In situations where more than 50% of a supplier's total sales are made to a specific buyer, there may be a presumption of the supplier's economic dependence. However, there is an important caveat to be made regarding Article 10, in the sense that infringements of this provision may only lead to behavioural remedies and not fines.
2.7 Is collective dominance recognised in your jurisdiction? If so, how is it defined?
Yes, collective dominance is expressly recognised by Articles 7 and 9 of the LORCPM. It is defined in the same terms as under EU competition law, in the sense that the law refers to a dominant position being held by "one or more undertakings", provided that from an economic point of view they present themselves or act together in a particular market as a collective entity. As yet, there have been no cases of collective abuse of dominance.
2.8 What is the statute of limitations to prosecute abuse of dominance cases in your jurisdiction?
Article 70 of the LORCPM provides that the statute of limitations for the SCPM to start administrative proceedings (whether ex officio or following an ex parte complaint) is four years, starting from the date on which:
- the infringement became known; or
- in the case of continuous infringements, the infringement stopped.
3 Abuse of dominance
3.1 How is 'abuse of dominance' defined in your jurisdiction?
Article 9 of the Organic Law for the Regulation and Control of Market Power (LORCPM) defines 'abuse of dominance' as any conduct which may have the effect of:
- restricting or distorting competition; or
- adversely affecting economic efficiency or general welfare.
The Superintendence for Market Power Control's (SCPM) non-binding Guide for the Investigation of Abuse of Market Power distinguishes exclusionary from exploitative abuses. 'Exclusionary abuses' are somewhat vaguely defined in the guide (p 27) as those consisting of conduct which:
- "through means different from competition on the merits, obstruct the development of competition"; or
- which "effectively or potentially affects competition, economic efficiency or the general welfare".
In its recent Banred decision (para 605), the SCPM further defined the concept of exclusionary abuse by explaining that it refers to the "obstruction of potential competitors' access to markets and the depredation of existing competitors". It also referred to the notion of "raising rivals' costs" as a valid theory of anti-competitive exclusion.
Exploitative abuse, on the other hand, does not receive much attention in the guide, which explains that such cases will generally involve excessive pricing.
3.2 What specific types of conduct constitute an abuse of dominance in your jurisdiction?
Article 9 contains a long, non-exhaustive catalogue of conduct that may be characterised as abusive, as follows:
- actual or effective obstruction of competitors' capacity to access markets or their capacity to expand their participation in the market, through means different from competition on the merits;
- unjustified extraction of consumer surplus;
- predatory pricing;
- exploitative pricing;
- unjustified manipulation of production output, or technical and technological development which may adversely affect other undertakings or consumers;
- unjustified price discrimination;
- unjustified discrimination regarding commercial terms different from prices;
- unjustified refusal to deal;
- inducement of third parties to refuse to deal with particular undertakings;
- imposition of unjustified exclusive dealing terms;
- unjustified cross-subsidies;
- refusal of access to essential facilities;
- exclusionary practices;
- exploitative practices;
- conditioned discounts and rebates with loyalty-inducing effects;
- abusive exercise of IP rights;
- sham litigation;
- unjustified imposition of non-compete and exclusivity terms; and
- resale price maintenance.
3.3 On what grounds may the enforcement authorities commence an abuse of dominance investigation?
There are no relevant substantive or procedural constraints for the SCPM to commence an investigation. This may happen either following receipt of an ex parte complaint or ex officio where the SCPM is sufficiently satisfied with the merits of the information at its disposal regarding the possible existence of an abuse of dominance infringement.
3.4 What powers do the enforcement authorities have in conducting their investigation?
The SCPM's investigative powers are set out in Articles 48 to 52 of the LORCPM. The SCPM may:
- demand the delivery of accounting books, correspondence and any sort of printed, magnetic or informatic records if they are reasonably connected to the conduct under investigation;
- require any persons to appear at a stated time and place to provide testimony; and
- inspect any premises connected to the undertakings under investigation, without prior notification or warning. Where such inspections occur at a person's domicile, prior judicial authorisation will be required. Forced entry into locked premises also requires judicial authorisation.
Furthermore, all legal and natural persons must collaborate with the SCPM in the conduct of its investigations, including any government agents and authorities. They must also provide the regulator with any relevant information that it may require. Access to confidential or secret information (eg, bank accounts) requires prior judicial authorisation.
3.5 Is there an opportunity for third parties to participate in the investigation?
Third parties other than the SCPM are never claimants in administrative proceedings, strictly speaking. In other words, third parties other than the regulator may submit complaints in connection with suspected anti-competitive behaviour, but do not have standing to initiate (or terminate) proceedings on their own. Nevertheless, there are no clear or explicit limits to voluntary submissions of evidence or statements of any kind before the SCPM pending an open investigation.
3.6 What are the general rights and obligations of the enforcement authorities during the investigation?
The burden of proof generally lies with the administrative regulator (Article 48 of the LORCPM). Both the SCPM and its agents are subject to a strict duty of confidentiality. Historically, abuse of dominance cases have been initiated following receipt of an ex parte complaint by the SCPM. After formal analysis of the complaint, the SCPM is entitled to a 180-day period of investigation, which may be unilaterally extended by an additional 180-day term. The SCPM may decide either to close the investigation definitively or to produce a preliminary report containing the results of the investigation. Subsequently, after a 90-day period, in which both the target company and the SCPM may address the legal and factual findings of the preliminary report, a final report is produced. This final report is then sent to the First Instance Commission (an administrative law tribunal within the structure of the SCPM), which has a 100-day term to produce a final decision (see also question 3.4).
3.7 What are the general rights and obligations of the target company during the investigation? What are the general rights and obligations of individuals targeted during the investigation?
Target companies and other individuals involved in SCPM investigations are assisted by the same due process guarantees (both legal and constitutional) that govern every administrative investigation under Ecuadorian law. Once the SCPM receives a complaint, it has an obligation to notify the target within 10 days, after which the undertaking in question has a 15-day term to present factual and legal explanations. If the SCPM decides to open a preliminary investigation and concludes the process with notification of a preliminary report (see question 3.6), the target is entitled to submit formal legal defences within a 15-day term. After the submission of defences, both the SCPM and the target have an additional 90-day period to submit evidence in support of their respective arguments, after which the case comes before the First Instance Commission for a final decision.
3.8 What factors will the enforcement authorities consider in assessing whether an abuse of dominance has taken place?
The SCPM can consider:
- the actual or potential effects of conduct on prices and output (ie, higher prices, lower output); and
- the actual or potential effects of conduct on the structure of the market (ie, exclusion of competitors).
For these purposes, all kinds of documentary, testimonial, statistical and econometric evidence showing the existence of the abovementioned effects may be considered by the regulator. Even if abuse of dominance is considered to be an objective concept, the SCPM may scrutinise the business strategies of target companies to identify subjective elements which may help it to establish the anti-competitive nature of their conduct.
3.9 In case of a finding of abuse of dominance, can the company seek to negotiate a settlement or similar resolution? If so, what is the process for doing so?
'Cease and desist' or 'commitment' agreements are regulated in Articles 89 to 93 of the LORCPM. Until a final decision has been rendered by the First Instance Commission at the SCPM, a commitment agreement may be reached between the target company and the regulator. At any point between the start of the investigation and the aforesaid final decision, the SCPM may decide, at the behest of the target company, to suspend the administrative process and negotiate the terms of an agreement during the 120-day term. There are at least two important legal conditions for a commitment agreement:
- The target company must acknowledge some degree of responsibility in connection with one or more of the charges filed by the SCPM; and
- Corrective measures must be offered to remedy the allegedly anti-competitive effects of the conduct under investigation.
4.1 What defences are available to companies in response to enforcement?
There are no 'objective necessity' or 'efficiency gains' justifications in the legislation, but it is implicit in the case law that the conduct impugned by the Superintendence for Market Power Control may be justified through analogous arguments. In Banred (paras 576-586), an objective necessity defence was put forward by the target company and although it failed, it was properly considered by the regulator. However, it is still early days for Ecuadorian abuse of dominance law and the scarcity of precedents make it difficult to provide a clearer picture of the defences against abuse allegations.
4.2 Can companies avail of leniency in abuse of dominance cases?
5 Remedies and sanctions
5.1 What remedies and sanctions may be imposed for abuse of dominance? Can sanctions be imposed on individuals?
Articles 73 to 88 of the Organic Law for the Regulation and Control of Market Power (LORCPM) provide for fines, as well as structural and behavioural remedies (ie, corrective measures or injunctive relief).
Article 73 of the LORCPM empowers the Superintendence for Market Power Control (SCPM) to "issue corrective measures in order to re-establish the competitive process, prevent, impede, suspend, correct or revert conducts contrary to the LORCPM and prevent such conduct from happening again". It further sets out a non-exhaustive list of examples as follows:
- an order to cease the anti-competitive conduct;
- an order to take specific actions or enter into specific contracts with the aim of re-establishing the competitive process; or
- the invalidation of anti-competitive clauses or provisions in legal documents.
Article 74 of the LORCPM provides the SCPM with some leeway to issue corrective measures specific to each case and states that the establishment of corrective measures does not preclude the regulator from imposing fines.
Article 76 of the LORCPM further provides that in case of non-compliance, partial or defective compliance or late compliance, the SCPM may issue fines and additional corrective measures, and may even appoint a comptroller to supervise compliance with the corrective measures.
Pursuant to Articles 78 and 79 of the LORCPM, abuse of dominance may be sanctioned with fines of up to 10% or 12% of the undertaking's gross annual turnover (calculated by reference to the previous fiscal year), if this is categorised as a 'serious' or 'very serious' breach of the law.
Pursuant to Article 79 of the LORCPM, the SCPM may impose fines of up to 500 basic salaries (currently $212,500) on legal representatives or corporate directors who actively participated in the infringement.
5.2 How are the remedies and sanctions in abuse of dominance cases determined?
The SCPM has substantial discretion to determine appropriate corrective measures, which may include orders to cease certain conduct and actions or to do certain things such as executing contracts. Article 79 of the LORCPM specifically provides that the SCPM may order undertakings to divest or order their breakup in cases in which it considers this the only way to restore competition.
Fines are limited by the percentages of turnover established in Articles 78 and 79 of the LORCPM, and are calculated considering the criteria set forth in Article 80 of the LORCPM.
Article 80 of the LORCPM lists the following criteria:
- The dimension and characteristics of the affected market.
- The market share of the responsible undertakings.
- The reach of the offence.
- The duration of the offence.
- The effect of the offence ...
- The benefits obtained ...
- The aggravating and mitigating circumstances ...
The LORCPM Regulation contains additional guidelines on the calculation of fines (Articles 95 to 104). The SCPM has also issued further secondary guidance setting forth the methodology to calculate fines for violations of the LORCPM, including the formulas to be applied.
The LORCPM and its Regulation set the maximum limits of the fines at 10% and 12% ('serious' and 'very serious' violations, respectively) of the turnover of the undertaking calculated on the basis of the last available financial statements. This turnover is not limited to the specific relevant market in which the violation occurred. The applicable methodology does acknowledge the relevance of the turnover within the concrete relevant market for the calculations.
5.3 Can the enforcement authorities impose remedies and sanctions directly or is court action required?
The SCPM can impose remedies (corrective measures) and fines directly. If a decision of the SCPM is final – meaning that challenges (within the SCPM or judicial) have not been brought forth within the timeframe mandated by law – the SCPM may compel compliance with the aid of a judge and any other governmental authorities. However, the undertaking may challenge a decision within the SCPM and may also judicially challenge the decision. The undertaking need not have exhausted administrative recourses to judicially challenge a decision of the SCPM.
A judicial (or administrative) challenge does not suspend the application of the decision (ie, enforcement of remedies and fines). Pursuant to Article 69 of the LORCPM, payment of the fine may be suspended pending a judicial decision if the undertaking issues a guarantee equivalent to 50% of the respective fine through an insurance policy or a bank guarantee.
6.1 Can the defendant company appeal the enforcement authorities' decision? If so, in what forum and what is the process for appeal?
Yes. The defendant may appeal the Superintendence for Market Power Control's (SCPM) decision before both administrative and judicial authorities. The decision is subject to a horizontal administrative appeal (recurso de reposición) before the same authority that issued the decision, which must be filed within 20 days of notification to the target company. The decision is also subject to a vertical administrative appeal (recurso de apelación), which must be filed with the apex administrative authority within the SCPM – the superintendent himself – within 20 days of notification. Finally, the decision may also be subject to an extraordinary administrative appeal (recurso extraordinario de revisión), which is available for three years after issue of the decision, on the grounds of:
- material errors in the facts or interpretation of the law; or
- new material evidence.
The defendant or the interested party need not exhaust a particular administrative recourse to access the others: for example, the defendant need not file a recurso de reposición and have it denied before being able to file a recurso de apelación.
Ultimately, the decision may be judicially appealed before the Contentious-Administrative Tribunal, which hears administrative law claims. Administrative appeals need not be exhausted to access the judicial appeal.
6.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
Yes. The Organic Law for the Regulation and Control of Market Power does not expressly afford all parties of the procedural right to appeal, but neither does it limit its availability to target/investigated undertakings exclusively. Furthermore, pursuant to the principles of Ecuadorian administrative law, the Ecuadorian Constitution and the Organic Administrative Code (Articles 149, 150, 151 and 217), any "administrative act" may be challenged by any interested party, which is defined as someone with a "legitimate interest". Thus, for a third party to successfully appeal a decision by the SCPM, it must successfully argue its legitimate interest; evidently, this will be easier for a third party such as the complainant (which is not technically a party in the process) than for a third party which is not directly involved in the investigation.
7 Private enforcement
7.1 Are private enforcement actions against abuse of dominance available in your jurisdiction? If so, where can they be brought?
Yes. Pursuant to Article 71 of the Organic Law for the Regulation and Control of Market Power (LORCPM), only follow-on damages claims (which may proceed only once there is a final or unappealable administrative decision) may be filed by the affected undertakings or persons. These claims will be adjudicated by civil judges (judges in charge of civil and commercial law matters), applying the common procedure for civil claims. Standalone damages claims are not available in Ecuador.
7.2 Are class actions or other forms of collective action available in your jurisdiction?
Class actions per se are not available in Ecuador. However, collective actions are available pursuant to Article 30 of the General Process Organic Code, which allows for a plurality of appropriately individualised and identified parties to file a joint claim.
7.3 What process do private enforcement actions follow?
Private enforcement actions (follow-on damages claims) must follow the common process for extra-contractual or delictual civil claims.
7.4 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
To the best of our knowledge, there are no precedents of private enforcement in Ecuador.
The only kind of private enforcement available is a civil damages claim; thus, the only type of relief through private enforcement is monetary compensation. Compensation may be requested for:
- direct, proven damages for actual loss (damnum emergens); and
- loss of profit (lucrum cessans).
The private enforcement regime has not been properly and fully developed. Article 71 of the LORCPM provides for private damages actions and the text provides for a special abbreviated process. However, this special abbreviated process is not available under the (relatively new) General Process Organic Code (ie, the code of civil procedure); thus, the only available process is the common, ordinary civil process. Apart from the calculation of damages, the civil courts must also declare the right to compensation of each claimant before them. Punitive damages are not allowed under Ecuadorian law.
7.5 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
Yes, the judicial decision on a private enforcement action may be appealed. The appeals available are those available to any private litigant before the civil courts. Decisions of the first instance courts may be appealed before the provincial courts. Decisions of the provincial courts may be appealed before the National Court of Justice.
8 Trends and predictions
8.1 How would you describe the current dominance enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The Superintendence for Market Power Control (SCPM) and Ecuadorian competition law experienced a very problematic start following the enactment of the first antitrust legislation in the country's history in October 2011 until October 2018, when the first administration left office. The first seven years of the domestic competition regulation system were marked by highly ideological policy which was also opaque and erratic, and which lacked any identifiable enforcement priorities.
The current administration, which took office in November 2018, represented a notable improvement, in that it approached enforcement from a more technical perspective and opened up the SCPM to constructive criticism both at home and abroad. It was in this context that the Ecuadorian competition system subjected itself to international scrutiny, and both the Inter-American Development Bank and the Organisation for Economic Cooperation and Development conducted a peer-reviewed examination of the legal system. In January 2021, an international team of competition law experts designated by these institutions, in close collaboration with the SCPM, published a report containing the findings of the examination and a series of recommendations for reform.
Perhaps the most important recommendation relates to enforcement priorities: the peer-reviewed report suggests that cartel busting and merger control should receive much more attention. Another very relevant recommendation addresses an issue that has plagued the SCPM since its beginnings and concerns the disproportionate amount of resources dedicated to the prosecution of unfair competition complaints (ie, false and misleading advertising and other consumer protection-related infringements). Moving away from unfair competition concerns would allow the SCPM to investigate more abuse of dominance cases. The report also recommends:
- the simplification and rationalisation of the non-exhaustive catalogue of abuses of Article 9 of the Organic Law for the Regulation and Control of Market Power (LORCPM) (see question 3.2); and
- the elimination of Article 10 of the LORCPM (abuse of economic dependence).
9 Tips and traps
9.1 What would be your recommendations to companies to avoid an abuse of dominance charge and what potential pitfalls would you highlight?
The institution of robust and consistent compliance programmes, in close collaboration with expert outside counsel, provides companies with a valuable tool to avoid dominance charges.
Another recommendation is to give serious consideration to the possibility of negotiating commitment agreements with the Superintendence for Market Power Control early in the investigation process.
A final general recommendation is to avoid the unnecessary inclusion of contractual provisions that could be misunderstood and misrepresented by the competition regulator as abusive (eg, exclusive dealing, territorial exclusivity, non-compete clauses), unless there are clear, objective justifications for them. Undertakings operating in highly concentrated markets (which are very common in Ecuador) should be especially cautious.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.