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ECUADOR FACING THE NEW RULES OF COMPETITION: EXPERIENCE IN COMPLIANCE, CHALLENGES AND GOALS Santiago Reyes Mena santiago.reyes@dll-lawoffice.com Quito - Ecuador. CONTENT. Overview of Antitrust Law Compliance Programs : Experiences Cultural challenges and legal challenges.
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ECUADOR FACING THE NEW RULES OF COMPETITION: EXPERIENCE IN COMPLIANCE, CHALLENGES AND GOALSSantiago Reyes Mena santiago.reyes@dll-lawoffice.com Quito - EcuadorCONTENT
  • Overview of AntitrustLaw
  • CompliancePrograms: Experiences
  • Cultural challenges and legal challenges
  • OVERVIEW OF ANTITRUST LAWOVERVIEW OF ANTITRUST LAW
  • Ecuador signed the Cartagena Agreement (today Andean Community - CAN) on 26.05.1969.
  • The Andean Community adopted Decision 608 entitled "Standards for the protection and promotion of free competition in the Andean Community", on 29.03. 2005.
  • Considered restrictive behaviors for competition agreements which have the purpose or the effect of:
  • Price fixing, conditions
  • Allocate markets,
  • Restrict the supply or demand;
  • Prevent or hinder access or permanence of current or potential competitors;
  • Coordinate positions in public tenders.
  • OVERVIEW OF ANTITRUST LAW
  • The President of the Republic signed a Executive Decree No. 1614 27.03.2009 whereby:
  • Establishes rules for the implementation of 608 Decision of the Andean Community of Nations
  • Creates an agency named as Subsecretaría de la Competencia y Defensa del Consumidor as part of the Ministry of industries and productivity.
  • OVERVIEW OF ANTITRUST LAW
  • INVESTIGATIONS
  • Air TransportMobilePharmacistSupermarketsSoft DrinksSugarFlour* A company was fined
  • OVERVIEW OF ANTITRUST LAW
  • According to the National Institute of statistics and Census, Ecuador is a concentrated economy.
  • Several driven competition law bills, one was approved in 2002 by the National Congress buy vetoed by the Vice-President.
  • Ecuador's Constitution of 2008 enshrined in several articles with constitutional precepts of competition.
  • RULES OF COMPETITION(COMPETITION LAW) Ley Orgánica de regulación y Control del Poder de Mercado / 13.10.2011
  • First internal Competition law which abolish Executive Decree No. 1614.
  • One of its objectives is the prevention, prohibition and punishment of collusive agreements.
  • Provides the creation of Superintendencia de Control de Poder de Mercado (Agency).
  • The designation of the Superintendent and the creation of the Agency are still in process.
  • The Agency will have broad powers to investigate and punish cartels in Ecuador.
  • RULES OF COMPETITION(COMPETITION LAW) Ley Orgánica de regulación y Control del Poder de Mercado / 13.10.2011
  • Civil liability
  • Actionforcompesationfordamagesmustbeexercisedbefore a civil judge.
  • Criminal responsibility
  • TheAgencymaynotifytheAttorney General of theState.
  • Criminalize cartel wasconsideredon a fewBills of the Law
  • Correctiveaction.
  • If it fails or they have delayed, partially or flawed, the Agency may, for collusive agreements designate a temporary auditor of the economic operator, in order to oversee the implementation of the corrective measures.
  • RULES OF COMPETITION(COMPETITION LAW) Ley Orgánica de regulación y Control del Poder de Mercado / 13.10.2011
  • Infringements.
  • Minor offenses with fines up to 8% of the total turnover of the company.
  • Serious offenses with fines up to 10% of the total turnover of the company.
  • Very serious offenses with fines up to 12% of the total turnover of the company.
  • RULES OF COMPETITION(COMPETITION LAW) Ley Orgánica de regulación y Control del Poder de Mercado / 13.10.2011
  • Cartel or any type of collusive behaviour
  • Thereis a LeniencyProgramm
  • There are serious and veryseriousoffences
  • Will be judged regardless if it constitutes a conduct typified and penalized under the Penal law.
  • Very serious offences, they may impose a fine up to 500 SAU to the legal representatives or persons involved in the agreement or decision.
  • RULES OF COMPETITION(COMPETITION LAW) Ley Orgánica de regulación y Control del Poder de Mercado / 13.10.2011
  • Cartel or any type of collusive behaviour
  • Recidivism is considered an aggravating circumstance and the penalties will not be lower than the previous.
  • The Agency may impose fines in successive and unlimited way in case of recidivism.
  • If the benefit obtained as a result of a contrary conduct are exceeding the thresholds of infringements, the Agency will penalized the offender with an amount identical of such benefits, without prejudice to punish recidivism.
  • COMPLIANCE PROGRAMS: EXPERIENCESCOMPLIANCE PROGRAMS: EXPERIENCES1. Multinationalundertakingscontinuerunningtheir Compliance Programs
  • More relevance of the Compliance Officer
  • Act facing uncertainty and adoption of conduct with a competitor or a trade association.
  • Train to avoid the risk of possible agreements with competitors.
  • Promote behavior of the code of conduct.
  • Coordinate reforms to the internal work regulations.
  • COMPLIANCE PROGRAMS: EXPERIENCES2. Local undertakings demonstrate two types of reaction
  • Local undertakings with positive reaction :
  • Undertakings willing to change of business behavior and attitude of their representatives.
  • Diagnosis of their commercial behavior in their sector and professional support
  • Promotion of a culture of respecting the rules of competition
  • Implementation of Compliance Programs and creation of codes of conduct
  • Limit what is allowed and what it is not allowed to deal with competition.
  • COMPLIANCE PROGRAMS: EXPERIENCES
  • Local undertakings with negative reaction:
  • Rejection and/or disregard of the rules of competition
  • Continuation of modus operandi withthecompetition
  • Belief of a negative impact on sales
  • NO professionalsupport
  • NOT promoting a culture of respecting the rules of competition
  • Rejection and/or ignorance over the implementation of codes of conduct and Compliance programs.
  • COMPLIANCE PROGRAMS: EXPERIENCES
  • TradeAssociations.
  • Development of activities to report on the Competition Law and its enforcement.
  • Incorporation of precepts of competition in their Code of Ethics.
  • Creating guides behavior for its members.
  • CULTURAL AND LEGAL CHALLENGESCULTURAL AND LEGAL CHALLENGES
  • Change in business attitude in every generation of the company's management
  • Create a culture that rejects cartels
  • Promote the concept of transparent business
  • Creation and acceptance of Compliance program
  • Promotion of a culture of competition and guides behavior in trade associations
  • Ethics of competition.
  • CULTURAL AND LEGAL CHALLENGES
  • Once the Agency is created it must:
  • Strive to be a technical entity and maintain an institutional reputation.
  • Train their staff in the fight against cartels.
  • Agreed models of cooperation with other competition authorities in order to fight against cartels.
  • Promote and guide through practical guides and normative techniques on the behaviour of economic operators in:
  • Public procurement, Integrity Pacts and cartels
  • Exchange of information between competitors
  • CULTURAL AND LEGAL CHALLENGES
  • Labor Law
  • Public employees of the Agency must establish a secure political, social and economic environment.
  • Ecuadorian rules lays down the right to audit the employees e-mails.
  • Undertakings do not provide disciplinary measures when their employees are involved in cartels.
  • CULTURAL AND LEGAL CHALLENGES
  • Attorney-ClientPrivilege
  • The laws of Ecuador do not establish specifically the confidentiality of relations between client and attorney or between companies and their in-house counsel.
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