ECUADOR: New Unfair Competition Law Comes into Force

Ecuador’s Congress (National Assembly) and Executive Branch discussed the Organic Law for the Regulation Against Unfair Competition for more than a year, with some of the proposed articles facing constitutional court challenges and presidential vetoes.

However, these deadlocks were overcome, and the bill became law and came into effect on Friday, August 29, 2025, nine days after the Congress discussed, and accepted, the vetoes submitted by the President of the Republic, and rulings of the Constitutional Court.

The new Law radically modifies the existing unfair competition regime. One of its most important elements is the division of the legal framework into two distinct jurisdictions:

• Simple Unfair Competition, over which civil courts will have exclusive jurisdiction; and
• Aggravated Unfair Competition, over which the Superintendence of Economic Competition (SCE) will have jurisdiction.

It is unclear when unfair conduct will be considered simple or aggravated. Under current law (part of the antitrust/competition statute), the SCE has stated that if an undertaking holds less than a 20 percent share of the relevant market and engages in a questionable practice, then that practice would not have the potential to affect the market and therefore would not be within the SCE’s jurisdiction. In that situation, it would either terminate the case or refer it to the intellectual property authority for consideration as a private dispute. If the SCE continues with this line of reasoning, then it will only consider cases with more than 20 percent participation within the relevant market as aggravated unfair competition.

Other important modifications are the addition of significant new unfair practices, including:

1. Deceptive, multi-level marketing schemes (pyramid schemes);
2. Abuse of economic dependence;
3. Selling at a loss;
4. Illicit advertising; and
5. Consumer-damaging practices.

Therefore, the SCE will be able to identify additional unfair conduct that it could investigate. The key factor in all these new practices is that there are “catch-all” prohibitions, leaving the SCE with discretion to analyze whether the conduct investigated occurred or not.

The new Law changes the fines from the current 8 percent of the total sales of the responsible undertaking to 12 percent. This increase was the subject of the presidential veto, stating this rise was unconstitutional. However, the Constitutional Court ruled that the Constitution protects consumers from unfair competition, and therefore, the high percentage of fines is constitutional and necessary for deterrence.

Now that the new Unfair Competition Law is in force, businesses must take the new prohibitions and fines into consideration to ensure that their commercial practices align with the new framework.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. Law & Practice updates are published without comment from INTA except where it has taken an official position.

© 2025 International Trademark Association