ECUADOR: An Introduction to Competition/Antitrust

This forthcoming 2025 promises to be momentous in Ecuadorian antitrust and unfair competition legal practice. The President of the Republic, Mr Daniel Noboa, after some delay, finally appointed the new head of the Competition Superintendence (Superintendencia de Competencia Económica). The policy approach that the new Superintendent will take at the helm of the national authority remains to be seen.

At the legislative level, an important reform of the Ecuadorian Competition Law (Ley Orgánica de Regulación y Control del Poder de Mercado) in the field of unfair competition (ie, deceptive advertising, trade secrets and business torts) has been in the works since 2022. A proposed bill, which is still being debated at the Ecuadorian National Assembly (the national parliament) that will result in the separation of antitrust (ie, merger control, restrictive agreements, and abuse of dominance) and unfair competition is expected to be enacted early in 2025. This new law will give ordinary civil courts jurisdiction to hear unfair competition disputes, which in turn is likely to cause an explosion in litigation once the system is decentralised.

During the past year, the Competition Superintendence has been busy conducting a series of market studies, in the agribusiness, shoe manufacturing, medical insurance, tourist lodgings and beer markets, among others.

Since the enactment of the national competition statute in 2011, unfair competition infringements have been dealt with as administrative violations, in the past year (according to official numbers published by the Competition Superintendence in March 2024) there has been 15 cases, of which 11 were rejected for lack of merit.

The Superintendence unit in charge of abuse of dominance and restrictive agreements opened 11 abuse investigations and 11 agreements investigations. On the other hand, there were 33 transactions notified to the regulator under the merger control regime, of which 18 were investigated: 9 of them under the phase 1 (abbreviated) procedure and the other nine under the phase 2 (in-depth) investigative procedure.

Apart from the investigative units (intendencias), there is an administrative tribunal within the Competition Superintendence that decides every case (ie, unfair competition, abuse, agreements, and merger control) on the basis of the reports produced by the aforementioned investigative units. This tribunal, the so-called Comisión de Resolución de Primera Instancia, issued 89 decisions and imposed fines for a total sum of USD18,160.563,42. Nevertheless, the absence of relevant cartel cases and the scarcity of abuse of dominance cases, in an economy where cartels and monopolies are commonplace, remains an issue of concern regarding the future of antitrust in Ecuador.

A new National Assembly will be elected in February 2025, alongside a new executive government, which will probably be an appropriate time to evaluate the viability of further necessary reforms (apart from the already mentioned unfair competition bill) that have been discussed in past years.

Two areas where the Competition Superintendence has been active in seeking normative change are the state aid regime and the regime for analysis (and eventual removal) of anticompetitive legal market barriers. These concepts are expressly recognized by the current Ecuadorian Competition Law, but unlike the European Union, where decisions on state aid by the European Commission are binding, or unlike neighbouring Peru, where decisions about the validity of secondary legislation that cause competitive distortions are also binding, the national competition authority lacks legal powers to issue binding resolutions in these areas. The Competition Superintendence may only issue advisory opinions for the benefit of other state institutions.

The Ecuadorian Competition Law allows for civil claims for damages derived from anticompetitive behaviour, but after more than a decade of existence of the national competition system, there are still no precedents. This fact is inherently connected with a series of institutional design flaws. It is common knowledge that monetary damages suffered by individual consumers, clients or other market participants may be insufficiently large to incentivize independent claimants to pursue any remedies. Ecuador lacks procedural devices akin to class actions or analogous collective actions to make competition damages a reality. Disgorgement remedies are also missing. The introduction of such mechanisms would constitute an important complement to the public enforcement of competition law.

Another connected issue of institutional design is the lack of expertise and familiarity with competition law in the domestic courts. If this problem is acute in contentious-administrative tribunals (the ones in charge with reviewing administrative decisions issued by the Competition Superintendence), the disconnection of civil courts with the discipline is even more pressing. The time has come to look to alternative models, such as one with specialized courts (with a jurisdiction not limited to antitrust matters but also encompassing adjacent fields such as consumer protection, intellectual property, and regulated sectors) modelled after the Chilean Tribunal de Defensa de la Competencia, the British Competition Appeal Tribunal or the Swedish Market Court, among others.