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28 May 2003
The concept of market dominance was first incorporated into Ecuadorian legislation with the enactment of Law 184/1992. Article 38 of the law, while not directly defining the implications of dominance over a market, recognizes a key factor which hinders free competition by including 'abuse of a dominant position' as a form of unfair competition.
A subsequent regulation issued in 1993 did not expand on this concept, merely establishing (in Article 9) the principle that the government should maintain neutrality in its supervision of unfair competition between state operators and private operators.
In 1995 a new general regulation was issued, Article 4 of which allowed the telecommunications regulator (CONATEL) to impose special rules on concessionaires with market dominance. However, the regulation did not define how market dominant operators were to be identified.
Further regulation was necessary following the opening up of the telecommunications market in March 2000. The General Regulation to the Special Law of Telecommunications of September 4 2001 inaugurated this new reform. Dominant operators are governed by Chapter 5 of the regulation, which establishes a special regime. A dominant operator is an entity that either (i) has registered in its accounts 30% of the total income for a telecommunications service for the preceding fiscal period, or (ii) effectively controls, directly or indirectly, the prices within a market, a market segment or a specified geographical area, or the prices of connection or interconnection.
During the first 150 days of every year CONATEL must identify the dominant operators - either by service or geographical criteria - on the basis of the concessionaires' annual financial statements.
Dominant operators must apply terms and conditions to all the concessionaires,
The special regime for dominant operators specifies that such operators cannot
participate in the administrative control of competitors. However, they can
seek the review of their status as a dominant operator. CONATEL must decide
on the petition within 30 days. The resolution of the CONATEL may be appealed
by judicial review.
CONATEL will also consider and take measures to remedy situations of abuse of a dominant position, after an investigation procedure of 60 days.
Despite the regulation, no operator has yet been declared to be dominant; therefore,
CONATEL's intervention has not yet been necessary.
Proper competition exists only for access services and internet data transmission. It is therefore particularly important to determine whether abuse of a dominant position has occurred in these markets.
For further information on this topic please contact Carlos R Chávez at Pareja & Asociados Abogados by telephone (+5934 2 68 7100) or by fax (+5934 2 68 7104) or by email (firstname.lastname@example.org).
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Carlos R Chávez Negrete