Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

Concentration operations requiring prior approval have to be notified to the SCPM within a period of eight days from the execution of the agreement. The Antitrust Law states that executing an economic operation before notifying the Antitrust Law will be regarded as a serious offence punishable by law with a fine of up to 10 per cent of the breaching economic operator’s total turnover in the fiscal year preceding that of the fine. All offences listed in the Antitrust Law are, in practice, sanctioned by the SCPM.

Which parties are responsible for filing and are filing fees required?

In the case of a merger, the party responsible for notifying the SCPM is the acquiring economic operator; for transfers of the assets of a business, the economic operator that is the recipient of the transfer; for the acquisition of rights representing capital, shares, or equity interests, the acquiring economic operator; for relationships because of common administration, the economic operator whose members on the administrative board become part of the administrative boards of the other economic operator; and, for the transfer of assets from one economic operator to another, the economic operator acquiring such assets.

When there are various economic operators involved in the acquisition of control of another or other economic operators, the notification must be made collectively, for which a common attorney must be appointed.

For the notification of economic concentrations, the economic operator providing notification must pay filing fees to the SCPM in a sum equal to the higher outcome of the following: 0.25 per cent of income tax, 0.005 per cent of sales volume, 0.01 per cent of assets, or 0.05 per cent of equity. These sums are calculated taking the economic operators with presence in Ecuador into account. The fee payment voucher must be attached to the notification.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

In accordance with the Antitrust Law, the SCPM has to issue its decision with respect to the economic operation within a term of 60 working days from the date the SCPM acknowledges receipt of the submitted notification. The SCPM may suspend the term for up to 60 calendar days. In addition, the initial term of 60 working days may, on an exceptional basis, be extended for up to 60 working days. The SCPM usually takes about three months between the date of the notification of the economic operation and the date of the resolution. The economic concentration operation can neither be closed nor perfected until authorisation from the SCPM is secured.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

The Antitrust Law stipulates that executing an economic concentration operation that must be notified but has not been authorised by the SCPM is a serious offence. This kind of offence, pursuant to the Law cited above, is sanctioned with a fine of up to 10 per cent of the breaching economic operator’s total turnover in the fiscal year preceding that of the fine. To date, no economic operators that have closed the transaction before securing SCPM approval have been sanctioned; nonetheless, the SCPM has the power to start administrative procedures to sanction.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

The sanctions described in question 12 also apply to foreign-to-foreign economic concentrations that produce effects in Ecuador. The SCPM has signed cooperation agreements with other antitrust authorities for collaborating in this type of case.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Premised on its legal power to subject the approval of an economic concentration to compliance with structural conditions, and as part of the conditions for approving an economic concentration in which the disinvestment of an asset package to be transferred to a third party had been ordered, in 2016 the SCPM resolved that the economic operators involved in an economic concentration had to sign a hold-separate arrangement until the ordered disinvestment was made. The reason was that the parties forming part of the economic concentration in Ecuador had to maintain their independence and competition at the market to avoid a monopoly. This took place in a stock purchase in the parent company between two subsidiaries that held the entire market share in Ecuador.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

There is only one economic concentration system in Ecuador, and there are no special rules or systems for public takeover bids. In other words, if as a consequence of a public takeover bid the thresholds and conditions set by the Antitrust Law are met, then it would have to be notified to the SCPM. Nonetheless, there are no secondary competition rules in Ecuador governing the execution of or compliance with a structural condition ordered by the SCPM that have to be observed for a public takeover bid.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

There is a form pre-established by the authority for notifying an economic concentration that was approved by way of an SCPM resolution. The form requests information related to the economic sector in which the economic operators involved in the concentration do business, a summary of the terms and conditions under which the operation will be carried out, the total value of the economic concentration, information regarding the goods or services offered, the chain of distribution, list of the providers of the economic agents involved in the concentration, general data of all operators forming part of the concentration operation, the relevant market, the total turnover of the participants, their market shares, the level at which the operation applies (national, regional, international), competitors at each one of the markets and the existence of barriers to entry. Together with the form, copies of the financial statements, draft of the legal document or agreement concerning the economic concentration, sworn statement that the information furnished is true, market analysis supporting the information supplied and confidentiality request must be submitted in the Spanish language.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

Once the economic concentration notification is filed, it will be investigated by the Concentrations Control Intendancy, which will follow the process and request information from the notifying economic operator, as well as from its competitors, providers and clients. Once the analysis stage is completed, it will submit a report to the First-Instance Resolution Committee. That committee will either approve, reject or subject the request to compliance with a behavioural or structural condition.

What is the statutory timetable for clearance? Can it be speeded up?

In accordance with the Antitrust Law, an economic concentration must be resolved within a term of 60 working days upon notification by the SCPM that it has received the filing. The SCPM, however, may suspend that term up to 60 calendar days and may also request an extension of up to 60 working days. No other time periods apply. The time it takes the authority to complete the administrative procedure for analysing the concentration will depend on the magnitude thereof.