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[null,"Prepared By:","Contributors:"]
[null,"Pérez Bustamante & Ponce","Mario Navarrete-Serrano"]
[null,null,"Diego Pérez-Ordóñez"]
[null,null,"Andres Rubio-Puente"]
[]
["Lex Mundi Global Merger Notification Guide"]
[]
["Report Generated: 5/1/2025"]
[]
["View your report results on next tab"]

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["Question","Ecuador"]
["Lex Mundi Merger Notification"]
["Is there a regulatory regime applicable to mergers and similar transactions?","Yes, it is set out mainly in the \nOrganic Law of Regulation and Control of Market Power (\"\nLORCPM\").\n"]
["Identify the applicable national regulatory agency/agencies.","Superintendencia de Competencia Económica (\"\nSCE\"; formerly, \nSuperintendencia de Control del Poder de Mercado).\n"]
["Is there a supranational regulatory agency (e.g., the European Commission) that has, or may have exclusive competence? If so, indicate.","No, there is not a supranational regulatory agency with competence in merger control matters.\n"]
["Are there merger filing requirements? If so, where are they set out?","Yes. Notification requirements are set out in the \nLORCPM, its \nRegulation, and the \nSCE’s Instructive on Administrative Proceedings (or “\nIGPA”).\n"]
["What kinds of transactions are \"caught\" by the national rules? (Identify any notable exceptions.)"," Transactions need to be notified to the SCE for merger control purposes when (i) there is a change of control over the target, (ii) which consists of either a vertical or a horizontal concentration (iii) that meets or exceeds at least one of two of the notification thresholds established in Ecuador’s Competition Act . \n Control is understood to change when an undertaking obtains the ability to make commercially strategic decisions over another that was previously independent –i.e., internal reorganizations do not require antitrust approval. It does not matter how such control is acquired, whether by de facto or de jure means, directly or indirectly. \n Transactions involving undertakings that (i) do not compete with each other or (ii) do not operate at different levels of the same supply chain (e.g., a raw material supplier and a manufacturer, or a wholesaler and a retailer) are not considered concentrations with antitrust relevance. \n Even where parties do not have a direct business presence in Ecuador, merger control regulation may be mandatory, considering the effects-based approach instated by the LORCPM . \n The following transactions are caught by national rules on merger control: \n \n Mergers. \n Assignment of assets of a trader. \n The direct or indirect acquisition of shares, equity, or debt certificates when it grants control or decisive influence over the target. \n Full-function joint-ventures.  \n \n Any other act or agreement that transfers the assets of an economic operator or grants control or decisive influence over the target. "]
["Is notification required for minority investments?","The acquisition of minority, non-controlling stakes in any company with operations in Ecuador is not subject to the merger control rules and does not require authorization from the \nSCE, except for cases where a minority and non-controlling stake allows the acquirer to block any strategic commercial decisions, thus granting negative control.\n"]
["Are foreign-to-foreign transactions captured by the merger control regime, and is there a local effects test?","If a foreign-to-foreign transaction has effects within an Ecuadorian market, it needs to be notified to the antitrust agency. The \nSCE has only rarely mentioned an effects doctrine, so it is unclear how direct the link to the Ecuadorian economy must be to trigger the obligation to file a pre-merger notification. We would advise you to approach this issue conservatively.\n"]
["What are the relevant thresholds for notification?"," An economic concentration is subject to authorization when one of two thresholds is met: \n \n Financial: The turnover of the resulting entity in the relevant market is over the amount set by the Regulatory Board, which is currently (2023) set at a joint turnover of USD $90 million. For insurance and reinsurance companies, the threshold is USD $96.3 million, and for mergers involving institutions in the national financial system the threshold is USD $1.44 billion, or \n Economic: As a result of the transaction, the company reaches or increases a market share of 30% or more in the relevant market where the company operates. \n "]
["Is the filing voluntary or mandatory?","Filing is mandatory when thresholds are met.\n \n"]
["Provide the time in which a filing must be made."," Notifications must be made within eight calendar days from the date of the ‘conclusion of the agreement’. The Regulation to the LORCPM provides further guidance regarding the 'conclusion' concept in the following manner: \n \n Mergers: From the moment the parties’ governing bodies agree to undertake the merger (e.g., signing of boards’ resolutions). \n Assignment of assets of a trader: From the moment the entities agree to the operation and determine its form, term and other conditions. In the case of companies, as of the moment, the assignment is approved by the parties’ governing bodies. \n Direct or indirect acquisition of shares, equity or debt certificates: From the moment the participants consent to the operation giving rise to the concentration and determine its form, term, and other conditions. In the case of companies, as of the moment, the sale is approved by the parties’ governing bodies. \n Joint-ventures: From the moment the administrators of the joint-venture are appointed. \n Any other act or agreement which grants control or decisive influence: From the moment the parties consent to the operation giving rise to the concentration and determine its form, term and other conditions. \n "]
["Is there an automatic waiting period? If so, please specify.","No, transactions cannot close until a clearance decision is issued.\n"]
["What are the form and content of the initial filing?","The \nSCE has issued a filing form template (available at: \nhttps://www.scpm.gob.ec/sitio/wp-content/uploads/2023/02/Formulario-Notificacion-obligatoria.pdf), which must be completed and used within all mandatory merger control filings. The required information and documents are established in the Regulation to the \nLORCPM, and it refers to general data about the notifying parties as well as specific information about the transaction, relevant markets, barriers to entry, and efficiencies, amongst others.\n"]
["Are filing fees required?","Yes. A fee of USD $25,216.51 has to be paid for all mandatory notifications (USD $12,608.25 for informative ones).\n"]
["Please provide an overview of the merger review process. Are there time limits within which the regulatory agency must act? Can they be shortened by the parties or be extended by the regulatory agency?","The merger control review consists of a two-phase 60-day investigation process. Phase I investigation takes place during the first 25 business days and Phase II from business days 26 to 60 (or 120, if the proceeding is extended for 60 additional business days, as allowed by the \nLORCPM). The clock starts ticking after the agency certifies the notification as complete, which can take up to five weeks from filing, depending on the information requested by the agency. It is common for the \nSCE to issue several RFIs prior to officially starting the clock. The \nSCE can also “stop the clock” for up to 45 business days.\nThese time limits cannot be shortened by the parties. The precise duration of the review process depends on the complexity of the matter as well as on the agency’s workload.\n"]
["What is the substantive test for clearance?","The general criterion is whether the transaction creates anticompetitive concerns. The \nSCE has not yet articulated a clear theory of harm or a standard for the substantial assessment of mergers. Currently, it seems the agency is willing to condition or prohibit transactions even if the risk of anti-competitive harm falls short of a substantial lessening of competition. Historically, the \nSCE has intervened even in cases where the risk for competition was marginal, setting the bar for substantive assessment even lower than the \nEU Significant Impediment of Effective Competition test.\n"]
["What decisions can the agency make in relation to a notified merger (e.g. approval, approval with conditions or prohibition)?","Approval, denial or conditional approval.\n"]
["Can parties proactively offer commitments to the agency to remedy identified competition concerns?","Although not formally a part of the procedure, it is possible to voluntarily offer remedies, or start negotiating them, during the \nSCE’s analysis.\n"]
["Describe the sanctions for not filing or filing an incorrect/incomplete notification.","Sanctions escalate in consideration of how far a notifiable transaction has moved along before the \nSCE begins a gun-jumping investigation. The \nLORCPM is very stringent on the penalties that may be imposed if a company does not notify a transaction. Late notification is a mild breach sanctioned with a fine of up to 8% of the turnover of the acquiring undertaking; closing without approval is an intermediate breach with a sanction of up to 10% of the turnover; where a newly merged entity conducts business operations within the market (after merging but without having been authorized), this would be considered a severe breach, sanctioned with a fine up to 12% of the turnover.\n"]
["Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger.","Please see above.\n"]
["Can the agency review and/or challenge mergers that are not notifiable?","Yes. The \nSCE can begin \nex officio investigations into non-notifiable transactions.\n"]
["Describe the procedures if the agency wants to challenge an unnotified transaction.","The regulator must begin an \nex officio investigation to determine whether an unnotified transaction was subject to its control and hence infringed the \nLORCPM.\n"]
["Describe, briefly, your assessment of the regulatory agency's current attitudes/activities, including enforcement trends and recent developments.","Following the OECD-IDB report on Ecuador’s competition regime, the \nSCE has been moving towards a more severe application of the law. For example, in 2021 Sia Products LLC was ordered to pay USD $2.6 million –the highest to date– for failure to notify its concentration with \nIndustria Cartonera del Palmar S.A.Some changes took place in 2022 as well. Traditionally, the financial threshold triggering the obligation to notify a transaction has been set by considering the income from the sale of all products or the provision of all services of the involved parties, regardless of their relevance to the operation. For that purpose, it was sufficient to refer to each party’s annual financial statements. In 2022, however, it was established that the assessment must now consider only the sales of products or services \naffected by the transaction –i.e., the sales specifically belonging to the relevant market. Although the amendment does not directly refer to merger control but to the general definition of turnover as established in\n Article 5 of the Regulation to the \nLORCPM, its most important implications do occur in this area (the others have to do with the calculation of fines).\nIn terms of decisions reached, seventeen transactions were notified to the merger control authority in 2022: twelve of them were authorized, four were dismissed, and one was denied.\nThe denied transaction was Difare’s proposed acquisition of Leterago del Ecuador S.A., which was to occur in two markets, as identified by the \nSCE: (i) the distribution of pharmaceutical products at a national level and (ii) its sale at a local level. Difare owns the Pharmacy drugstore chain as well as the Cruz Azul and Farmacias Comunitarias franchises; Leterago is active in the distribution of all types of pharmaceutical products.\nAccording to the \nSCE, the distribution of pharmaceutical products in Ecuador is currently concentrated mainly in four firms, including the notifying parties. The authority concluded that the proposed transaction would result in an oligopolistic market where the merged entity’s share would exceed the dominance threshold and be nine times greater than its next competitor’s, which would distort competition. Vertical competitive concerns and entry barriers were also identified by the agency.\nAlthough Difare proposed remedies and then filed an appeal, the Superintendent upheld the Commission’s decision, and the transaction was ultimately denied. According to the \nSCE, no behavioral or structural remedies would be sufficient to address its concerns.\nRelevant discussions arising from the case include the substantive standard applicable to merger control in Ecuador as well as the level of disclosure of economic data required to allow an effective exercise of the notifying party’s rights.\nThis is the fourth transaction denied by the Ecuadorian competition authority since its creation a decade ago.\n"]
["Other important/notable information:"]