Parties and Intervening Parties

The public action of unconstitutionality was filed by the National Assembly of Ecuador, through its President. The Office of the President of the Republic and the Attorney General's Office (Procuraduría General del Estado) were summoned to the proceeding to defend or challenge the constitutionality of the challenged provisions, although they did not submit substantive arguments. The SCE appeared with a technical report on the impact of the eventual ruling on the administrative proceedings within its jurisdiction.

Relevant Facts

The dispute originated in the legislative process of the Organic Reforming Law of Various Legal Bodies for the Strengthening, Protection, Promotion and Advancement of Popular and Solidarity Economy Organizations, Artisans, Small Producers, Microenterprises and Ventures.

Said law amended, among other provisions, articles 9, 11, 78, and 80 of the LORCPM, relating to abuse of market power, restrictive agreements and practices, administrative infractions, and criteria for determining sanctions.

The President of the Republic filed a partial objection on grounds of inexpediency and proposed alternative texts for the challenged provisions. To insist on the originally approved text, the National Assembly was required to obtain the favorable vote of two-thirds of its members. However, the ratification motion obtained 86 affirmative votes, when 92 were required. Despite this, the Assembly submitted the originally approved text — rather than the alternative text proposed in the presidential veto — to the Official Registry (Registro Oficial) for publication.

Ruling of the Constitutional Court

The Court held that noncompliance with a formal rule of the legislative procedure does not automatically render a provision unconstitutional. However, in this case, the irregularity was not a mere procedural defect, but a substantial impairment of the principle of separation of powers and the system of checks and balances.

In particular, the Court concluded that, because the qualified majority required to ratify the original text was not reached, a tacit acquiescence of the National Assembly to the presidential objection was configured. Therefore, the publication of the original text disregarded the President of the Republic's power of objection and his constitutional role as co-legislator.

On that basis, the Court declared that numbers 6, 7, 20, and 23 of the Second Reforming Provision were unconstitutional in form, having been enacted with an original and unremediable formal defect.

Decision

The Court resolved to:

Accept the public action of unconstitutionality No. 43-24-IN.

Declare the formal unconstitutionality of numbers 6, 7, 20, and 23 of the Second Reforming Provision of the Reforming Law.

Order that the declaration have retroactive effects, ordering that any legal effect produced since the entry into force of the provisions declared unconstitutional be reversed.

Order the President of the Republic to submit to the Official Registry, within a term of five days, the text of numbers 6, 7, 20, and 23 contained in the presidential partial objection of January 21, 2023.

Call the attention of the National Assembly for having submitted to the Official Registry a text that did not obtain the required vote.

Order the National Assembly to train the personnel of its General Secretariat on the legislative procedures set forth in the Constitution and in the Organic Law of the Legislative Function.

Effect on Cases Pending Before the Superintendence of Economic Competition (SCE)

The decision has a direct impact on administrative proceedings before the SCE in which the reforms declared unconstitutional have been applied.

According to the SCE's report considered by the Court, there were five administrative sanctioning proceedings initiated on the basis of letters “i” and “j” of numeral 1 of article 78 of the LORCPM, incorporated by the provision declared unconstitutional. Of these, one was pending and four had concluded. In addition, the SCE reported 87 proceedings in which it might be necessary to apply articles 9, 11, and 80 of the LORCPM, as amended by the challenged provisions.

The retroactive effect of the ruling means that the provisions declared unconstitutional can no longer produce legal effects. Consequently, the SCE must review, on a case-by-case basis, the pending, concluded, challenged, or ongoing proceedings in which the invalidated text was applied.

In pending proceedings, the SCE should not continue to base charges, allegations, conduct analysis, or the determination of sanctions on the provisions declared unconstitutional. In particular, any allegation based exclusively on letters “i” and “j” of article 78 of the LORCPM would be seriously compromised.

In sanctioning proceedings that have already concluded, the ruling opens the door to requests for review, nullity, revocation, or challenge, depending on the procedural status of each case, where the resolution depended on the invalidated provisions.

The provisions declared unconstitutional amended central provisions of the LORCPM, in particular: