On Monday, January 17, 2022, the Ecuadorian Competition Agency (SCPM) sent the Unfair Competition Bill[1] to the National Assembly of Ecuador—the legislative branch.  This legislative proposal has been drawn up by the authority due to the recommendations of the Organisation for Economic Co-operation and Development (OECD) and the Inter-American Development Bank (IDB) in the framework of the recent inter pares examination of competition law and policies (“Peer Review”).

Since 2011 until the present, the subject of unfair competition has mainly been regulated by the special economic competition law, the Organic Law for the Regulation and Control of Market Power (LORCPM) in articles 25, 26, 27 and 78 (section 2 c) regarding “unfair practices”.  This would change if the Bill put forward by SCPM is approved, since this regime would be repealed.

Below are some of the changes that this Bill proposes.

Acts of unfair competition are classified as simple and aggravated.  Simple acts are those that affect or may affect the interests of private parties in the market: competitors and consumers, including those arising out of breach of intellectual rights.  Aggravated acts are those that owing to their seriousness and magnitude also affect the interests of public order and free competition.

The now SCPM would change its name to the Economic Competition Agency (“SCE”). The competent and exclusive authority at the administrative level for simple acts would be a civil court judge—a summary proceeding, Organic General Code of Procedure (COGEP).  For those that breach intellectual rights, there are also actions at the special authority for the matter.  Aggravated acts, such as the “concurrencia de figuras”, can also be subject to administrative actions at the SCE.

The authority is released from the obligation to define a relevant market for all that is related to unfair competition, including establishing the seriousness of an unfair act.  The current type of “abuse of market power in a situation of economic dependence” ceases to be considered as part of the “abuse of market power” and instead is understood as an unfair competition practice under the term “abuse of a situation of economic dependence”.  The types of unfair competition are broadened. The concept of the “average consumer” is implemented and used.

The burden of proof is inverted in the face of an accusation of an infringement, since it will correspond to the defendant to prove the non-existence of the illegality attributed to it.  The motion for reconsideration is eliminated for both the LORCPM and the new unfair competition regime.

On Tuesday, February 18, the Legislative Administrative Council of the National Assembly (CAL)—its governing body and in charge of approving (or setting aside) the draft, an act that will formally begin the legislative proceeding—asked the Technical Legislative Unit to prepare its report (non-binding).  To date the expectations are maintained, but as of now it is possible to admire the competition agency’s effort to transform competition regulations in the Ecuadorian jurisdiction and, above all, to generate wellbeing in the market for economic operators and consumers.

[1] Document available at: https://bit.ly/3Iekezy

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