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25 June 2020
The Ecuadorian competition authority (the Superintendency for Market Power Control (SCPM)) recently made significant strides in the M&A field. On 20 April 2020 the SCPM published a resolution which established a fast-track merger control procedure and introduced the so-called 'failing firm' defence.(1)
The new procedure grants several advantages to undertakings that fulfil its application requirements. In addition to saving time, the procedure has removed the uncertainty surrounding the failing firm defence.
In Ecuador, the SCPM normally takes between four and seven months to review, approve, deny or shape a merger. Under the fast-track procedure, that time has been reduced significantly, making it highly attractive for undertakings that meet the application requirements.
Undertakings that wish to access the new procedure must fulfil at least one of the following requirements:
If the parties comply with one of the abovementioned requirements, they can notify the SCPM and request a fast-track procedure. The review period and its resolution must be made within 25 days.
Similarly, if an undertaking needs to apply for a failing firm defence, the following requirements must be met:
Notably, before the latest resolution was introduced, the failing firm defence was highly confusing in practice and only referred to in Article 13(b) of the Organic Law for the Regulation and Control of Market Power.(2)
The new fast-track merger procedure has been long overdue and is a welcome development, especially as it makes Ecuador an advantageous M&A venue and will save time and money for the SCPM and undertakings that meet the application requirements. Further, it has clarified the application procedure for the failing firm defence, making the Ecuadorian competition regime more attractive and simpler for all economic players.
For further information on this topic please contact Carlos Trujillo at Meythaler & Zambrano Abogados by telephone (+593 983 309 762) or email (email@example.com). The Meythaler & Zambrano Abogados website is available at www.meythalerzambranoabogados.com.
(2) Article 13(b) states as follows: "When control is acquired by a person by virtue of a mandate conferred by the authority public pursuant to the regulations regarding the liquidation, bankruptcy, insolvency, suspension of payments, creditors agreement or other similar procedures."
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