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Regulatory reform policies for developing market process: The

Lissangee Stefanía Mendoza García, 0000-0003-1228-5819

1

Rubén Méndez Reátegui, 0000-0001-8702-5021

Jennifer Elizabeth Lara Alvear, 0000-0002-5124-6911

José Carlos Portilla Ruiz, 0000-0001-7380-4980

Jostin Gabriel Suárez Jacome, 0000-0001-5806-788X

Pontificia Universidad Católica de Ecuador. Proyecto Gide

josejamiscarlos@gmail.com

Pontificia Universidad Católica de Ecuador. Proyecto Gide

gabriel_Srz17@hotmail.com

Recepción: 15 de agosto de 2021 / Aceptación: 5 de noviembre de 2021 / Publicación: 3 de enero de 2022

Citación/como citar este artículo:

Mendoza, L., Méndez, R., Lara, J., Portilla, J. y Suárez, J. (2022). Regulatory reform policies

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Abstract

Market processes suggest legal figures that are applied effectively and efficiently. In the

Ecuadorian case, it is essential for legal institutions to be strong, which implies formality and

stability. However, for this to happen, it is necessary to implement legal reforms to improve

market regulation. For this reason, this article aims to examine, utilizing the analytical-

conceptual, economic, and normative method, certain legal structures with their rules of the

game, highlighting those barriers in the rules of entry, permanence and exit from the market.

pretende examinar, mediante el método analítico-conceptual, económico y normativo, ciertas

estructuras jurídicas con sus las reglas de juego, destacando aquellas barreras en las reglas de

entrada, permanencia y salida del mercado.

Palabras clave: mercado financiero, empresa, sistema económico, reforma jurídica, aplicación

de la ley.

Lissangee Mendoza, Rubén Méndez, Jennifer Lara, José Portilla, Jostin Suárez. Regulatory reform policies for

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Introduction

In Ecuador, countless administrative regulations and legal norms have been introduced, which

have varied according to how they were enacted, the customs, the political orientation of the

government in power, and the social conceptions that society was living and experiencing at

that time.

Therefore, this article roughly alludes to the policies that have remained in force until the

present date, which, from the legal analysis, reveal and reflect the guidelines and orientations

intelligently identify and take advantage of the potential of internal resources: for

Moreover, it is first necessary to determine what is understood by the market; the market is the

ideal framework in which the interaction between supply and demand of a product or product

line takes place, in which suppliers and demanders are related, regardless of the legal

framework governing a specific market (Méndez, 2017; 2019).

Thus, the development of this article begins with the study of the "merger control regime in

Ecuador" and involves revising the "right to freedom of association and competition" as a right

recognized by the Constitution of the Republic of Ecuador. Later, the question of whether

concentrations effectively violate the right of competition and the different types of

concentrations established in the Organic Law of Regulation and Control of Market Power is

based. Also, it is analyzed from the normative point of view regarding the efficiency of

However, due to the inevitable business crisis caused by the COVID-19 pandemic, it is

necessary to analyze those legal tools of business rescue that allow a company to remain in the

market or exit it in an orderly manner through an agreement with its stakeholders. Therefore,

the second section highlights those general aspects of the Ecuadorian reorganization

proceeding and the potential obligation to strengthen the procedure through the Economic

Analysis of Law parameters.

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The third section developed in this article has been called "The shareholders' agreement as a

mechanism to position family businesses in Ecuador." This section reviews the shareholders'

agreement and good corporate governance as efficient tools/instruments to improve the organic

family-owned corporations, defining share ownership as a problem because it restricts access

to secondary markets.

among others). In this sense, Glass and Newig (2019) pointed that:

Such adaptive governance arrangements can be decisive when dealing with highly

dynamic and long-term sustainability problems. This in turn requires reflexivity of

institutions and procedures, a governance characteristic that often seems to contradict

traditional rationalist problem-solving approaches. (p. 100)

As mentioned in the previous sections, regulatory reform is considered necessary due to the

constant institutional problems in Ecuador derived from the erroneous manifestation to provide

and Medina, 2020).

Methodology: qualitative, normative, and doctrinal analysis

First, based on a qualitative methodological approach, it can be argued that the legal and

administrative standards that regulate the market have undergone the most significant number

example is an ideological and political change that Ecuador will surely experience with the

previous contributions of authors such as the Argentinian professor Juan Carlos Cassagne

intertwined. On the other hand, there is a legal significance that lies in the technique of

Lissangee Mendoza, Rubén Méndez, Jennifer Lara, José Portilla, Jostin Suárez. Regulatory reform policies for

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framework concerning legal-economic regulation, since, as Korstjens and Moser (2017, p. 275)

state, qualitative research studies reality from its natural context. Furthermore, the use of

qualitative research through the proposed techniques responds to the need to investigate social

economic, legal, and political agents involved in the regulatory procedures, hence the

importance of using tools that allow greater freedom during the information gathering process.

Therefore, the methodology proposed for this article has been applied and replicated for legal

research to determine a) relevance and b) importance and c) ensure its originality. The

qualitative (theoretical and conceptual) research proposed in this article focus on defining the

discussion topics is the legal analysis of market reform and regulatory improvement for

on academia), primarily showing an ideological bias or a partisan approach.

rights. Article 66, paragraph 13 states, "The right to associate, assemble and demonstrate freely

and voluntarily" (CRE, 2008). Its main objective is to guarantee the freedom of association and

Control of Market Power.

Some authors state that the concentration of companies arises when an economic agent loses

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of its internal organization and its relationship with the outside (be it the government,

parliament, the business community). (p. 2)

horizontal (at the same level of activity) or vertical (within the same sector of economic

activity), at different levels: production, distribution, marketing, and other subsectors. (Lizana

operations have been established in the Organic Law of Regulation and Control of Market

Power and are regulated by the Superintendence of Control of Market Power.

the Control of Market Power (SCPM)

competition regime in Ecuador. It has application in five areas: 1) conducts considered abuse

objective, such as an efficient and equitable outcome. Within competition policy,

in terms of resource allocation, production scale and cost technology. (p. 12)

Economic concentrations mainly contribute to the growth of the country's economy so that they

Lissangee Mendoza, Rubén Méndez, Jennifer Lara, José Portilla, Jostin Suárez. Regulatory reform policies for

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out by the economic agent restrict competition through the entry and exit barriers, collusive

agreements in such a way that they generate damage to other economic agents.

The consequences of the global health crisis caused by the COVID-19 pandemic have been

20%. The self-employed are often less protected by unemployment benefits compared

with certain regulatory limitations. However, this has been scarcely applied so that

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exceptional preventive concordat with two legal sub-institutions that provide for speed and

efficiency, with comprehensive coverage of subjects who may avail themselves of such

concordat.

Considering that only some companies could keep operating during the confinement and that

others did not find a way to continue their commercial activities, the latter generated obligations

the bankruptcy procedure. An alternative would be their legal integration to implement a

requirements in terms of the resources demanded to comply with them. (OECD, 2009,

p. 6)

There is a unique need for facilitators to handle negotiations between the debtor company and

the stakeholders not to overburden the Judiciary. For this, it is necessary to create alternative

administrative or private channels, for example, avoiding the meaningless recognition of

credits that is merely a formality, a step that can be simplified if this body hires qualified

companies to evaluate this situation quickly and at lower costs, so that the specialized body

would have more time to supervise. For this it’s necessary to explain that:

Negotiation systems create a structure to encourage and facilitate direct negotiation

between parties to a dispute, without the intervention of a third party. Mediation and

Lissangee Mendoza, Rubén Méndez, Jennifer Lara, José Portilla, Jostin Suárez. Regulatory reform policies for

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conciliation systems are very similar in that they interject a third party between the

disputants, either to mediate a specific dispute or to reconcile their relationship.

Mediators and conciliators may simply facilitate communication or may help direct and

settlement. Arbitration systems authorize a third party to decide how a dispute should

be resolved. (Center for Democracy and Governance, 1998, p. 4)

corporations limits their possibilities of diversifying funds, and this scenario restricts their

future and are based on mutual acceptance of the contract parties. (Binz et al., 2021,

p. 395)

These are contractual instruments that seek to regulate relations between shareholders or

between shareholders and the management body of the companies, and good corporate

governance, which are rules and principles whose purpose is to control the economic activity

of companies through the transparent publication of financial non-financial information.

The family structure present in closed stock companies seeking financing limits their

possibilities of diversifying funds since they cannot access secondary markets such as stock