On August 20, 2025, the National Assembly approved the report issued by the Economic Development Committee, which addressed the Constitutional Court’s opinion on the Draft Organic Law on Regulation against Unfair Competition.

With this decision, the legal text is now ready for enactment, consolidating a new autonomous legal framework to prevent and sanction unfair market practices, complementing the existing Organic Law on Regulation and Control of Market Power.

1. Why is this Draft Unfair Competition Law relevant for your company?

1.1. Universal scope and cross-cutting effect: The new law applies to all companies and economic actors, regardless of their size or sector. Any organization with operations or effects in the Ecuadorian market must review its practices in light of this new regulatory framework.

1.2. Conducts classified as unfair: Prohibited behaviors include acts of deception, confusion, imitation, denigration, comparison, pyramid sales schemes, exploitation of another’s reputation, aggressive practices, unlawful advertising, among others.

1.3. Dual liability regime: The law distinguishes between:

• Simple unfairness: directly affects competitors or consumers. Actions are processed through civil proceedings. By introducing a direct judicial route for simple unfairness claims that does not require proof of harm to competition, the Draft Law is expected to increase the number of lawsuits and open the door to claims for damages by competitors and consumers.
• Aggravated unfairness: has a broader impact, affecting public economic order. In this case, the SCE will have full powers to investigate, sanction, and impose corrective measures, as well as significant fines on companies.

2. Types of unfair practices subject to sanctions

The regulation prohibits a broad range of practices which, by distorting consumers’ economic behavior or unfairly affecting other market operators, are deemed unfair. Among these practices are the following:

• Acts of confusion: the use of signs, packaging, slogans, or presentations that may mislead consumers about the business origin of a product or service. Such conduct is deemed unfair when there is a risk of association with the activity, goods, or services of another economic operator, even if there is no exact coincidence in the elements used.
• Acts of deception: any conduct that contains false information or that, even if true, due to its content or manner of presentation, misleads or may mislead the consumer, thereby affecting their behavior. This includes statements regarding the price, quality, origin, characteristics, quantity, fitness for use, method of distribution, or any other attribute of the product or service.
• Acts of imitation: imitation is permitted unless it infringes intellectual property rights.
• Acts of denigration: the dissemination of inaccurate, false, or irrelevant statements that may undermine a competitor’s reputation.
• Acts of exploiting another’s reputation: the use of distinctive signs, expressions, or references associated with another economic operator in order to take advantage of its reputation or prestige in the market. Even if the true origin is disclosed, this practice is considered unfair when it seeks to obtain unjust advantages from another’s recognition.
• Pyramid sales practices: the promotion or management of schemes in which participants’ compensation derives primarily from the recruitment of new members rather than from the actual sale of goods or services. These types of structures are deemed unfair due to their deceptive and fraudulent nature.
• Acts of discrimination: differentiated and unjustified treatment of consumers in terms of prices or sales conditions, unless a reasonable cause exists.
• Abuse of a situation of economic dependence: the exploitation of a supplier’s or client’s dependence when they lack equivalent alternatives in the market.
• Acts of unlawful advertising: the dissemination of advertising content that is misleading, aggressive, abusive, sexist, discriminatory, surreptitious, or that violates fundamental rights, particularly those of children and adolescents.

The law presumes the unfairness of these practices and empowers the competent authority to impose sanctions, order the immediate correction of such practices, and safeguard the rights of consumers and economic operators. The central objective is to ensure a fair and transparent competitive environment, aligned with the principles of good faith, commercial loyalty, and the protection of the general economic interest.

3. Strategic assessment: a call for preventive action

Although the bill was subject to a presidential partial veto and constitutional review, the National Assembly accepted the President’s objections, maintaining the pillars of the sanctioning regime and the dual liability framework. With final approval, regulatory expectations are now defined, and companies must anticipate immediate compliance once the law is published in the Official Gazette.

4. The SCE as a new enforcement authority

The Superintendence of Economic Competition emerges as the technical authority responsible for enforcing the new regime in aggravated cases. Its powers include the imposition of sanctions, preventive and corrective measures, as well as the conduct of administrative proceedings.

5. What should companies do?

Although the law has already been approved by the Plenary and is only pending enactment, its content already sets a clear regulatory trend. Companies must prepare for a more demanding regulatory environment, making it essential to:

• Review commercial and advertising policies: Identify practices that may be considered unfair.
• Strengthen compliance programs: Adapt internal protocols to the new standards.
• Assess reputational and sanction risks: Particularly when operating in sensitive markets or engaging in aggressive practices.

For more information, please contact us at the following email addresses:

Competition Practice:

María Rosa Fabara Vera: mrfabara@bustamantefabara.com

José Rafael Bustamante C.: jrbc@bustamantefabara.com

Diego Ramírez Mesec: dramirez@bustamantefabara.com

Daniel Castelo: dcastelo@bustamantefabara.com

Kirina González: kirinag@bustamantefabara.com

Camila Sánchez: csanchez@bustamantefabara.com