Competition Regulation in Ecuador
| DOI | 10.1093/joclec/nht009 |
| Date | 13 June 2013 |
| Pages | 755-774 |
| Year | 2013 |
| Published By | Oxford University Press |
COMPETITION REGULATION IN ECUADOR
Luis Marı
´n-Tobar
ABSTRACT
Economic growth has been restricted in developing countries because of
the existence of high degrees of concentration and numerous market failures
affecting development. In these types of markets, implementation of competi-
tion law and policy is fundamental to work toward a much-desired equilibrium,
or, at a minimum, to correct these market failures and promote transparent
competition. The experience of other countries and their approach to the
implementation of competition regulation may provide substantial benefits for
developing countries, which can refer to the tools, successes, and failures in
their implementation processes. The Andean Community has an emerging
history of implementing competition law through community legislation and
domestic laws. The most remarkable of these cases, which provides material
for a case study, is the country of Ecuador, which in the absence of domestic
regulations was allowed to apply the Andean Community Decision 608 on
competition. After two years of application of such general community legisla-
tion on competition, Ecuador finally enacted its first domestic competition law
on October 13, 2011. That law’s authority was appointed in September 2012.
Ecuador is immersed in the first stages of implementation.
JEL: A12; K21; K22; K23; L1; L4; 01; 05
I. INTRODUCTION
The experience and success of developed countries with regulated market
economies, as well as the growing tendency in developing countries to im-
plement and enforce competition policies worldwide, are clear and convin-
cing evidence that countries that lack adequate regulation of competition
policy should gradually begin the process of implementing competition rules
and regulations and establishing a corresponding entity to enforce them.
As the various economic models and theories have demonstrated, the best
way to promote economic growth and a healthy market is to foster develop-
ment through regulated competition. Markets that have functioned through-
out time with an inadequate or nonexistent competition policy have seen
their development retarded by the abuse of monopolies or operators holding
Associate, Pe
´rez Bustamante & Ponce; seconded to White & Case LLP. Email: lmarin@
pbplaw.com.
Journal of Competition Law & Economics, 9(3), 755–774
doi:10.1093/joclec/nht009
Advance Access publication 13 June 2013
#The Author (2013). Published by Oxford University Press. All rights reserved.
For Permissions, please email: journals.permissions@oup.com
market power, gained in many cases by the existence of entry barriers, either
directly introduced by the economic agents in the market, or through gov-
ernmental subsidies, state-owned entities, corruption, and many other
factors. The effective process of implementing and enforcing competition
rules and regulations has stemmed from the influence of commercial suc-
cesses in countries like the United States and the members of the European
Union. Those schemes have witnessed a steady evolution of their case law
and practice through years of experience.
The tendency in less developed countries in recent times has been to
adopt either the U.S. antitrust scheme or the European Union’s rules, or to
develop hybrid systems.
1
Examples of setbacks and experimentation can be
seen through the experiences of countries such as South Korea, Vietnam,
Venezuela, and Peru, as well as many unsuccessful attempts by countries
like Bolivia, which to the present day has no specific competition law in
effect, and Ecuador, which only enacted its first domestic competition law
in October 2011, and whose authority was appointed in September 2012.
This article is focused on studying the process of implementing competi-
tion laws in developing countries, along with suggested measures for positive
and gradual implementation, as well as a reference to schemes of competi-
tion policy throughout Latin America. The article specifically reviews a case
study of current Andean laws protecting competition, with a focus on
Ecuador, which implemented a general 2005 Andean community trade rule
in the absence of approval of a domestic competition law until October 13,
2011, when its domestic competition law was finally enacted. The article
also includes a comprehensive analysis of the substantive provisions in the
recent law and its implications for the Ecuadorean market and for legal
practice.
II. DEVELOPING COUNTRIES, TRANSITION ECONOMIES,
AND COMPETITION LAW
It is important for developing countries to promote economic development
both by legal reform and a sound competition culture and policy, consider-
ing that one of the biggest constraints to development is the lack of a healthy
market that fosters innovation and investment. The long-term effects of
prolonging the existence of markets that have never been regulated or that
have inadequate protection regarding competition is that a deep-rooted busi-
ness culture of non-regulation is fixed in the minds of the general public,
generation after generation, ranging from the educated and uneducated
small consumers to the businessman and even, notably, the lawmaker. This
generalized issue poses a challenge of significant concern during the initial
1
William E. Kovacic, Getting Started: Creating New Competition Policy Institutions in Transition
Economies,23B
ROOK.J. INT’LL. 403 (1997).
756 Journal of Competition Law & Economics
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