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
El Fast Fashion en Ecuador: Protección legal, límites y desafíos dentro de la industria creativa
El impacto del fast fashion en el sistema de propiedad intelectual ecuatoriano, explicando qué elementos de la moda pueden protegerse legalmente, cuáles no son susceptibles de protección y cuáles son los principales desafíos para diseñadores y marcas frente a posibles plagios.
Piercing the Corporate Veil in Ecuador: When limited liability no longer protects shareholders
Limited liability is one of the main advantages of incorporating a company. However, in Ecuador this protection is not absolute. Courts may apply the doctrine of piercing the corporate veil and extend liability to shareholders or directors when the company has been misused. This has become increasingly relevant in commercial litigation and debt recovery cases.
Levantamiento del velo societario en Ecuador: cuándo la responsabilidad limitada deja de ser un escudo
La responsabilidad limitada es uno de los principales beneficios de constituir una compañía; sin embargo, en Ecuador no es absoluta. En determinados casos, los jueces pueden aplicar el levantamiento del velo societario y extender la responsabilidad a socios o administradores cuando se demuestra abuso de la personalidad jurídica. Este criterio cobra cada vez mayor relevancia en litigios mercantiles y de recuperación de cartera.
Nice Classification: Summary of Goods and Services for Trademark Registration
The Nice Classification constitutes the cornerstone of the international system used to organize goods and services for trademark registration purposes and is administered by the World Intellectual Property Organization (WIPO). The system divides goods and services into 45 classes and serves as the technical foundation for determining the scope of trademark protection. Its proper application is essential to ensure adequate protection and to avoid limitations or potential conflicts.
Clasificación de Niza: Resumen de Productos y Servicios para el Registro de Marcas
La Clasificación de Niza es el eje del sistema internacional utilizado para organizar los productos y servicios a efectos del registro de marcas, administrada por la Organización Mundial de la Propiedad Intelectual (OMPI). Este sistema divide los productos y servicios en 45 clases y constituye la base técnica que determina el alcance de la protección marcaria, siendo fundamental su correcta aplicación para garantizar una protección adecuada y evitar limitaciones o conflictos futuros.
