Antitrust Litigation 2024 Comparisons

Legislative Framework

Ecuador enacted the Organic Law for Regulation and Control of Market Power in 2011 (“Competition Law”). The agency (Superintendency of Economic Competition) was created in 2013. The Competition Law provides the legal framework for antitrust infractions (abuse of dominance, cartels and gun jumping), and for unfair competition practices. Both antitrust infractions and unfair competition practices are subject to similar fines and sanctions reducing the effectiveness of the agency’s control duties.

Additionally, upon the Ecuadorian Competition Law, which is an administrative law, both antitrust infractions and unfair competition practices are subject to state action, meaning that the agency is – in any case – the one with the duty and power to prosecute such infractions. Follow-on actions between private entities may result because of the state prosecution of antitrust infractions.

However, the administrative cases prosecuted by the Ecuadorian agency arise out of complaints/reports of competitors or consumers. Much of the litigation in this area involves complaints between competitors for alleged unfair competition practices, which captures a large part of the authority’s time and resources.

In matters strictly related to economic competition, there are several ongoing litigations involving horizontal and vertical agreements, abuses of dominance and gun jumping. Also, every day it is more common to see litigation for preventive measures and actions to block mergers. Actions to block mergers are not specifically provided for in the Ecuadorian Competition Law but are addressed under general administrative law principles.

Robalino represents several clients in these proceedings and has been able to appreciate first-hand the way in which these proceedings are bogged down by the authority’s inexperience, as well as lack of resources to achieve comprehensive economic analysis.

To mitigate such complexities, the local authority, the Superintendency of Economic Competition, has issued a series of guidelines aimed at generating greater certainty with respect to its actions, as well as a better understanding of the authority’s approach to the analysis of anti-competitive conduct.

Important Antitrust Cases

Since competition policy in Ecuador is strictly enforced by the state, there is no private antitrust cases. However, there have been follow-on cases in which parties attempted to sue for damages before civil judges. This is because, until the enactment of the Competition Law, anti-competitive conduct could be considered civil offences and as such brought before civil judges. In Carlson Wagonlit Travel case, defended by Robalino, the Pichincha Provincial Court declare the lack of competence of civil judges, since by that time the competence to hear and sanction anti-competitive conducts had already been expressly delegated to the Superintendence of Economic Competition.

Apart from this case, there are others that have referred only to damages generated by the commission of an anti-competitive conduct, previously sanctioned by the Superintendence of Economic Competition. There is at least one arbitration in which the quantum of damages arising out of the termination of a contract was discussed. However, in that case the arbitral tribunal discussed the existence of the anti-competitive practice as part of the analysis of the causal link between the damage-generating event and the damage, which resulted in several criticisms since this is reserved to the Competition Agency.

It is worth mentioning that there have been several attempts to separate antitrust and unfair competition into two different laws, to enable the SCE to focus on competition matters exclusively. The rationale behind these legislative attempts lies in the nature of unfair competition, which almost exclusively revolves around private interests’ protection, rather than competition, consumer welfare or economic efficiency.

However, the SCE has opted to propose a sort of hybrid system, whereby acts of unfair competition that affect consumers in a generalised manner or affect competition in some way, continue to be part of its competence. The future of this discussion remains uncertain, considering that Ecuador’s Assembly has not reviewed the law yet.

Also, since 2023 some amendments to the legal framework have taken place. Ecuadorian competition law – the LORCPM – abolished the prohibition of abuse of economic dependence, but included instead sanctions for conducts specifically committed by supermarkets in detriment of small or medium-sized suppliers. Said amendments also exempted the Superintendence of Economic Competition to define a relevant market on preliminary phases of an investigation and other non-punitive proceedings. Also, the amendments included definitions of restrictions “by object” and “by effect” in the context of anti-competitive agreements.

Likewise, on September 2023, the Regulatory Board of the LORCPM amended the (mandatory) Relevant Market General Guidelines (“Resolution No. 011”), by making the analysis more flexible. This amendment states that the use of quantitative techniques for substitution analysis is not mandatory any more for the competition authority, as it is now able to select the techniques and methodologies that it considers more suitable, as long as the Ecuadorian Agency specifies the legal reasoning for choosing and selecting each method.

Ecuadorian competition policy is of public enforcement. Therefore, private antitrust claims are not possible as stand-alone actions. In competition matters, private claims are only available as follow-on actions to pursue damages as a result of an anti-competitive conduct.

Decisions on competition law cases are enacted by the Superintendence of Economic Competition, an administrative control body whose decisions are subject to judicial review. Alternatively, parties to competition administrative proceedings may appeal to the Superintendent of Economic Competition (maximum authority within the agency) or to the local courts. The local court in charge of reviewing these decisions is the Administrative Tribunal. The decision of the Administrative Court may be subject to cassation and other constitutional remedies.

The Superintendence of Economic Competition (SCE in Ecuador) is an administrative authority, whose acts can be challenged before local courts, since this is a constitutional right. Although, all of the SCE’s decisions are binding for the involved undertakings until otherwise rendered void. As a rule, decisions of foreign NCAs are not binding to the local courts.

Ecuadorian competition law does not provide for the participation of the SCE in damage claims. However, there is no provision in the Ecuadorian legislation that prevent the SCE from being summoned to one of these proceedings in order to provide support in technical terms, given that local courts have no expertise in competition matters.

Pursuant to Article 48 of the LORCPM, the burden of proof to determine the existence of anti-competitive conduct is on the SCE. In these proceedings, the standard of proof is based on the verification of the following elements: (i) existence of an anti-competitive conduct; and (ii) actual or potential effects on competition, economic efficiency or general welfare. Article 8 of the Regulation of the LORCPM regulates the cases in which an anti-competitive agreement is presumed to be restrictive by object.

Although the LORCPM sets forth parameters to consider for the verification of the materiality of anti-competitive conduct, the Ecuadorian Competition Law or its regulations does not provide for a certain standard of proof as in the case of criminal proceedings (ie, beyond reasonable doubt). Although there have been no doctrinal developments in this regard, recent discussions have leaned towards the application of a more rigorous standard of proof than in civil proceedings, since competition law is a branch of the punitive power of the state and as such has corresponding elements of criminal law.

Regarding judicial proceedings, the burden of proof lies in the party that wishes to render null the decision of the SCE or invoke a passing-on defence.

Pursuant to Article 48 of the Ecuadorian Competition Law, the competition agency bears the burden of proof within the administrative process (investigation of anti-competitive or unfair competition practices), unless overturned due to evidence tempering or obstruction of process.

Defendant has the burden of proof in passing-on defence under procedural rules. However, there is not relevant case-law developed to settle academic discussions around pass-on defence and applicable standard.

There is no passing-on defence in follow-on actions for damages arising out of antitrust cases or unfair competition practices.

The Superintendence of Economic Competition has four years to investigate and sanction breaches to the LORCPM, from the date on which this authority becomes aware of a breach. In the case of continued breaches, the Superintendence of Economic Competition has four years from the cessation of the breach.

The statute of limitations is interrupted by any act of the Administration with formal knowledge of the interested party aimed at complying with the Law and by the acts carried out by the interested parties with the purpose of securing, complying with or executing the corresponding resolutions.

On the other hand, the statute of limitations for damage claims is five years from the enforcement of the decision of the Superintendence of Economic Competition.

Private antitrust claims are not available in Ecuador. Follow-on actions can take from three to five years until final resolution.

Ecuadorian Competition Law does not provide anything on class/collective actions or its opt-in/opt-out nature. However, under the rules of civil procedure in general, class actions are possible but limited to damages regarding competition matters.

As per Consumer Law provisions it can be concluded that a sort of joint actions can be presented on an opt-in basis, where a common proxy represents an association of consumers.

If claimants can demonstrate:

• the existence of a damage;
• a causal link between the alleged damage and the anti-competitive conduct; and
• foreseeability of the damage,

joint actions can be brought by direct and indirect purchasers.

Pursuant to Article 78 of the Ecuadorian Competition Law, any person affected by anti-competitive conduct may file a claim for damages, based on the damage suffered. To this end, claimant must demonstrate: (i) the existence of a damage; (ii) a causal link between the alleged damage and the anti-competitive conduct; (iii) foreseeability; and (iv) subsistence.

As long as claimants can demonstrate: (i) the existence of a damage; (ii) a causal link between the alleged damage and the anti-competitive conduct; (iii) foreseeability of the damage; and (iv) its subsistence, class actions can be brought on behalf of direct and indirect purchasers.

Class actions may be brought by any group of persons who are bound by a common interest, in this case, damages arising from breaches of Ecuadorian Competition Law. In the case of consumer associations, under Article 62 of the Consumer Defense Law, a certification is needed for its legal capacity to be recognised. To achieve so, every consumer association must be registered before the corresponding Ministry.

Given the territorial scope of competition laws, proceedings in Ecuador are always governed by the LORCPM. Also, the Superintendence of Economic Competition will be competent to investigate and sanction anti-competitive conduct carried out by any undertaking whose economic activities affect or may affect the Ecuadorian market.

Regarding follow-on claims (damages), jurisdiction lies in civil judges as per Article 71 of the LORCPM.

In administrative proceedings carried out by the Superintendence of Economic Competition, disclosure is mandatory as per Article 48 of the LORCPM. To this end, the Superintendence of Economic Competition must guard the confidentiality of the disclosed information, in line with its internal regulations for information classification. It should be noted that, while mandatory, the duty to disclose is limited by constitutional rights to defence, privacy and legal certainty.

In the context of judicial proceedings, while there is no discovery as such, judges may order the production of public and private documents requested by the parties for the defence of their cases. Parties may also seek for pre-actions to assure the presentation of a certain document in trial.

The production of documents ordered by the Superintendence of Economic Competition. Article 48 of the LORCPM grants the Superintendency of Economic Competition broad powers for the collection of evidence within its investigation proceedings. However, obtaining and retaining correspondence such as that exchanged between attorney and client must be preceded by a court order, unless it is voluntarily surrendered. Thus, under Article 51 of the LORCPM, professional privilege could be invoked as an exception to the duty of disclosure.

Information presented before the Superintendence of Economic Competition can be subject to confidentiality by which the Ecuadorian Agency is forbidden to allow unauthorised third parties to access it. While there is the opportunity to request the confidentiality of a document in administrative proceedings before the SCE, in judicial proceedings this is not feasible since all proceedings are public, except those related to national security and certain criminal offences.

Pursuant to the Leniency Regulation enacted by the Superintendence of Economic Competition in 2019, settlement agreements and any other document in the file of leniency applications are protected from disclosure. In addition, SCE officials must protect the identity of the applicant, the information discussed in meetings, the content of the documents submitted, and other inputs provided by the applicant. Therefore, disclosure of any document must be previously approved by the applicant. With the applicant’s approval, the evidence submitted in the leniency file will be reproduced on the main investigation file for the indictment of those involved in the anti-competitive conduct.

One of the powers of the Superintendence of Economic Competition is to request witness statements regarding the facts under investigation. These statements can be provided both written and orally. Pursuant to the LORCPM and its Regulations, there are two types of testimonies that may be collected by the Superintendency of Economic Competition: (i) under oath; or (ii) without oath. Only for the first case the presence of a lawyer is required, since in the second case the statement is free and spontaneous. However, in both processes the SCE must respect the constitutional guarantees and rights of the witness.

According to the Superintendence of Economic Competition procedural rules, in order to gather a testimony without oath, the Agency can impose fines in order to secure full compliance of a subpoena. In this case, a witness can freely and voluntarily accept the commitment of anti-competitive conduct, except when it generates criminal liability or when it violates its duty to keep reserve or secret due to their status, employment or profession.

Parties can present any means of proof to sustain their cases, including expert witness reports. Typically, in the context of administrative proceedings, evidence given by expert witnesses is presented by written statements. Rebuttal of this and any other evidence is done by written means and oral arguments presented by parties’ representatives.

In the context of damages claims before civil judges, evidence given by expert witnesses is presented by written statements and is subject to cross-examination.

Under Ecuadorian law, only consequential damages and lost profits are subject to compensation. Punitive or exemplary damages are not available under Ecuadorian law.

Although the passing-on defence have never been brought before Ecuadorian judges, nothing prevents it from being presented in order to avoid compensation for damages that have been borne by a third party other than the plaintiff. Given that, pursuant to Ecuadorian jurisprudence, for a damage to be compensable it must be certain, real and effective, the passing-on may be applicable under Ecuadorian law.

Pursuant to Ecuadorian case law, one of the elements that must converge for damage compensation is a causal link between the damage and, in this case, the breach of Ecuadorian Competition Law. Therefore, liability is not limited to direct purchasers but to any person who has suffered damage as a result of anti-competitive conduct.

Ecuadorian legislation does not provide for a procedure for bringing contribution proceedings against a third party.

In administrative proceedings the Superintendency of Economic Competition may grant injunctive relief if the concurrence of periculum in mora and fumus boni iuris is demonstrated. These precautionary measures are intended to prevent that the effects of anti-competitive conduct continue.

Conversely, given the nature of the proceedings for the compensation of damages before civil judges, no injunctive relief can be granted, since judge’s decisions will only conclude whether or not a plaintiff is entitled to compensation for damages and in what amount.

Nevertheless, once damages are awarded, injunctive relief can be sought and granted in order to assure its collection.

There are no methods of alternative dispute resolution available under Ecuadorian legislation for competition matters. On this subject, it is worth mentioning that there is an ongoing academic discussion about arbitrability of competition law matters which it has not been yet resolved. To date, the doctrine has accepted that damages resulting from anti-competitive conduct can be heard by an arbitral tribunal. However, since competition law in Ecuador is of public enforcement, the determination of the commitment of an infraction to the law is sole responsibility of the state through the Superintendence of Economic Competition.

Given that Ecuadorian legislation does not provide for a litigation funding prohibition, this is entirely possible.

When the court finds that a party has litigated in an abusive, malicious, reckless or disloyal manner, it can be condemned to pay the cost incurred by its counterparty and the state.

Appealing is a constitutional right. First level judgments may be appealed to the Provincial Court. This court can review points of fact and law. Judgments rendered by the Provincial Court may be appealed before the National Court of Justice. However, in this last instance, only points of law may be reviewed.

Regarding competition matters, the decisions enacted by the Superintendence of Economic Competition can be appealed before the Administrative Tribunal. For its part, the decisions of the Administrative Court may be subject to cassation. At the same time, in order to safeguard constitutional rights that can be breached in the context of this proceedings, any decision of authority may be challenged before constitutional judges, who can evaluate points of fact and law.

Robalino does not expect any future developments in civil antitrust litigation, as there is no official news on this matter. A new unfair competition law is still being discussed at Ecuador’s Assembly, which may bring new developments on that area. Still, it is too early to know whether the bill may be approved and enacted.

It is worth noting that one of the cases in which Robalino is currently involved will surely generate one of the most important precedents in cartel control in recent years. In this case, the controversy lies in the definition of the relevant market as a necessary input for the determination of the undertakings that are part of a market and that as such may be part of horizontal agreements. The hypothesis that the Superintendence of Economic Competition has defended so far in this case is that there is the possibility of price fixing among potential competitors, which contradicts much of the theory that has been developed worldwide so far. This precedent will mark the prosecution of cartels in Ecuador in the following years.