Through Executive Decree No. 1193 of November 17, 2020, President Moreno reformed the Regulations for the Application of the Organic Law on Market Power Regulation and Control (LORCPM). The reform introduces procedural and substantive changes in the economic concentration regime, abuse of market power and restrictive practices. The following is a summary of the most relevant aspects:
- Control of economic concentrations
The control of economic concentrations regime is the one with the most reforms with the issuance of this Decree. The innovative procedure that has been incorporated to analyze economic concentration operations stands out, which is divided into two phases. In the first one, the Superintendency of Market Power Control (SCPM) has 25 days to authorize operations if there is no doubt about their innocuousness. In case further analysis is required, a second phase takes place in which a decision is made within 60 additional days. The Regulations, in turn, recognize the possibility for the SCPM to establish a fast-track procedure for the control of concentrations[1].
The following amendments are also introduced: (i) repealing all factors for considering the participants’ turnover in a concentration act, stipulating that the provisions of Article 17 of the LORCPM must be complied with; and (ii) simplifying the process of investigating non-notified concentrations.
- Abuse of market power and restrictive agreements and practices
Market power abuse and restrictive practices were also modified, albeit to a lesser extent.
Regarding the former, the Decree repealed the specific conducts involving the abuse of market power in employment situations, leaving only a general clause.
Regarding restrictive practices, the reform included the following changes: (i) the presumption that they are anti-competitive was eliminated, regardless of the effects they may have; (ii) a new provision was added stating that restrictive practices prohibited due to their purpose cannot be considered as having little significance due to their potential to restrict competition, regardless of their scope of operation; and (iii) the list of restrictive practices due to their purpose was reduced to three: price fixing, limitation in production, distribution and/or sale, and market sharing.
Finally, regarding the exemption to the prohibition of restrictive practices, the Decree repealed the existing conditions for a restrictive practice to be considered anti-competitive and included four new ones: (i) the practice must contribute to the improvement of the production and distribution of goods or services; (ii) the practice does not impose restrictions that are not essential; (iii) the practice allows consumers to equitably participate in its benefits; and (iv) the practice does not give operators the possibility of eliminating competition with respect to a substantial part of the products or services.
The reform also allows for the SCPM to develop specific rules when it identifies a group of practices that cannot be considered anti-competitive in a given sector.
[1] This has in fact been established through resolutions SCPM-DS-2020-018 and SCPM-DS-2020-019 of April 20, 2020.
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