Quevedo & Ponce - Legal News
Mergers & Acquisitions: How to Prevent Your Business from Incurring in Sanctionable Economic Concentrations under Ecuadorian Law
- May 16, 2024
- Quevedo & Ponce
When discussing mergers and acquisitions (M&A), we refer to a series of legal and non-legal acts, including economic, financial, and accounting actions.
Whether a company acquires the rights of another, either fully or partially, the expected outcome is always to have a larger company (understood as market share) compared to any of the preceding entities.
The point of legal interest, however, arises when the result of these acts violates regulations governing the economic concentration of commercial operators. In Ecuador, the Organic Law of Regulation and Control of Market Power stipulates that certain companies engaging in capital transfers must notify the competent authority (Superintendency of Economic Competition), which will then evaluate each case to determine if there have been any regulatory infringements.
The companies required to make the aforementioned notification are:
a) Those whose total business volume exceeds the limit set by the Regulatory Board within a specific period.
b) Those in which, as a result of the concentration, a share equal to or greater than 30 percent of the relevant market for the product or service at the national level or in a local market is acquired or increased.
If a breach of regulations is determined, such as failing to comply with the required notification, it is within the competent authority’s power to impose sanctions, typically monetary penalties, which can be a significant burden for the company receiving them.
For these reasons, before initiating a corporate procedure aimed at completing mergers and acquisitions, it is recommended that companies seek proper legal counsel and adhere to compliance standards, encompassing both good corporate practices and proper observance of regulations such as Competition Law.
At Quevedo & Ponce, our team of experts with extensive experience is qualified to provide you with the appropriate legal advice based on your specific needs and in accordance with your company’s activities.
More Articles
Geographical Indications: Value and Protection of Origin
Geographical indications (GIs) are a form of intellectual property protection that recognizes the link between a product and its place of origin. They ensure that the product’s characteristics, quality, or goodwill derive from its geographic environment, helping preserve authenticity, strengthen the local economy, and protect the cultural heritage of communities.
Indicaciones Geográficas: Valor y Protección del Origen
Las indicaciones geográficas (IG) son una forma de protección de la propiedad intelectual que reconoce el vínculo entre un producto y su lugar de origen. Garantizan que las características, calidad o reputación del producto provengan de su entorno geográfico, contribuyendo a preservar la autenticidad, fortalecer la economía local y proteger el patrimonio cultural de las comunidades.
Corporate Transformation and Sports Joint Stock Companies: Effects of the Constitutional Court Decision that Invalidated the Organic Law of National Solidarity
The Constitutional Court of Ecuador declared the total unconstitutionality of the Organic Law of National Solidarity, determining that it was enacted in violation of the principle of unity of subject matter and the ordinary legislative procedure. This decision nullifies the obligations imposed upon Simplified Stock Companies (S.A.S.) and Sports Joint Stock Companies (S.A.D.), restoring the previous regulatory framework and reaffirming both the supremacy of constitutional review and the need of maintaining normative coherence within the Ecuadorian legal system.
Transformación Societaria y Sociedades Anónimas Deportivas: Efectos de la sentencia constitucional que dejó sin vigencia la Ley Orgánica de Solidaridad Nacional
La Corte Constitucional del Ecuador declaró la inconstitucionalidad total de la Ley Orgánica de Solidaridad Nacional, al determinar que fue aprobada vulnerando el principio de unidad de materia y el procedimiento legislativo ordinario. Esta decisión deja sin efecto las obligaciones impuestas a las Sociedades por Acciones Simplificadas (S.A.S.) y a las Sociedades Anónimas Deportivas (S.A.D.), restableciendo el marco normativo previo y reafirmando la supremacía del control constitucional y la necesidad de mantener la coherencia normativa en el sistema jurídico ecuatoriano.
Mediation: An effective and legal way to resolve conflicts in Ecuador
Mediation is a conflict resolution process whereby the parties, assisted by a neutral third party called a mediator, seek to reach a voluntary agreement on a negotiable matter, in an extrajudicial and definitive manner. This mechanism promotes fast, confidential, and fair solutions that have the same legal validity as a final judgment, fostering dialogue and a culture of peace in Ecuador.
