Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
The primary law regulating the control of economic concentrations in Ecuador is the Organic Law for Market Power Control (the Antitrust Law), which was enacted on 13 October 2011. The main secondary laws are:
- the Regulation of the Antitrust Law, published on 7 May 2012;
- the Administrative Procedural Regulations published on 7 April 2017; and
- Resolution No. 009 of the Antitrust Regulation Entity in respect of turnover thresholds for concentration operations, published on 25 September 2015.
The oversight entity in antitrust matters is the Superintendency for Market Power Control (SCPM). The investigation entity of the SCPM is the Economic Concentrations Investigation and Control Intendancy (the Intendancy), and the resolution entities are the First-Instance Resolution Commission (the Commission) and the Superintendent of Market Power Control (the second instance at the administrative stage).
The Intendancy is the entity in charge of investigating and processing the control procedures of economic concentrations, while the Commission is the body in charge of approving, rejecting or subordinating approval of economic concentrations to compliance with behavioural or structural conditions.Scope of legislation
What kinds of mergers are caught?
The transactions that are caught are economic concentrations that result in a change in control, through:
- mergers between companies or economic operators;
- transfers of assets;
- the acquisition, directly or indirectly, of ownership or any equity interests or securities that are given the right to be converted into shares;
- common administration or rights that allow substantial influence on decision making; and
- any other agreement or act that transfers the assets or grants control of an economic operator.
To be considered an economic concentration under Ecuadorian antitrust legislation, the concentration must be between local economic operators or, if between foreign companies, must produce effects in Ecuador. The Antitrust Law establishes two thresholds that economic concentration operations must meet to determine whether the transaction requires merger clearance from the Antitrust Authority. It is sufficient for only one threshold to be fulfilled for the operation to be notified for analysis and approval by the Antitrust Authority.
One threshold concerns the market share of the economic operators participating in the operation, while the other involves business turnover.
Transactions that are subject to merger clearance must be filed before the SCPM by the party acquiring control.
What types of joint ventures are caught?
Joint ventures that produce effects in Ecuador, surpass the thresholds established in the Antitrust Law and cause a change in the control in one of the economic operations by decisively influencing the decisions of the other must be filed before the SCPM. The scope of application of the Antitrust Law includes state-owned enterprises; therefore, joint ventures involving this kind of economic operation are also subject to prior control by the SCPM.
Is there a definition of ‘control’ and are minority and other interests less than control caught?
Article 12 of the Regulation of the Antitrust Law defines control as ‘the result of contracts, acts or any other means that, taking factual and legal circumstances into account, confer the possibility of asserting substantial or decisive influence over a company or economic operator. Control may be joint or exclusive’. Minority or other interests that are less than control are not caught under the merger control regulation.Thresholds, triggers and approvals
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
The Antitrust Law stipulates that if an economic concentration operation meets one of the following thresholds, the operation must be filed for analysis and clearance by the SCPM:
- the turnover in Ecuador of all participants in the economic concentration in the preceding fiscal year exceeds;
- financial institutions: 3.2 million basic salaries (the basic salary in 2022 is US$425);
- insurance and reinsurance entities: 214,000 basic salaries; and
- other industries: 200,000 basic salaries; and
- the economic concentration involves economic operators engaged in the same economic activity and, as a consequence thereof, the acquired or increased share in the relevant market is equal to or surpasses 30 per cent.
To calculate the turnover of economic operators participating in the economic concentration, the turnover of the following economic operators must be added together:
- the economic operator in question;
- economic operators in which the economic operator in question directly or indirectly has:
- more than half of the subscribed and paid-in capital;
- the power of exercising more than half of the voting rights;
- the power of designating more than half of the members on administrative bodies; or
- the right to direct the economic operator’s business;
- companies or economic operators with the rights and powers listed in point (2) with regard to a company or economic operator involved;
- economic operators in which an economic operator listed in point (3) has the rights listed in point (2); and
- economic operators in which the various economic operators listed in points (1) to (4) jointly have the rights listed in point (2).
The Antitrust Law requires the submission of the merger clearance filing within eight calendar days of the date of the board or shareholders’ resolution authorising the transaction.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
The economic concentration notification is mandatory when the concentration produces effects in Ecuador so long as it exceeds the relevant thresholds.
Although the law stipulates that no prior authorisation from the SCPM will be required if the concentration does not surpass the thresholds, the SCPM may, directly or upon the petition of a third party, request that the economic operators involved in the transaction submit a merger clearance filing for informative purposes. If the SCPM requests notification for informative purposes, the filing must be submitted within 15 days of the date that the SCPM serves notice of the request.
The Antitrust Law establishes that when an economic concentration exceeds the thresholds but involves the acquisition of shares, bonds, obligations or other convertible bonds without voting rights, as well as acquisitions of economic operators liquidated or that have not reported any activities in the country in the past three years, it is exempt from the mandatory merger clearance filing.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
Provided that the foreign-to-foreign mergers produce effects in Ecuador, the operation must be filed for clearance by the SCPM. Foreign-to-foreign mergers with no local effects are not subject to approval.
Are there also rules on foreign investment, special sectors or other relevant approvals?
Ecuador has no special provisions on foreign investment. Nonetheless, special sectors that are determined as strategic may require, depending on the scope of the transaction, other approvals besides antitrust filings.