In the coming days, there could be an important shift in the business sector of the food industry in Ecuador, with the acquisition of a renowned local company by a foreign group. It is about the Spanish company La Estancia Investment Holding SL, which on January 24 notified the Supervisory Authority for Economic Market Competition (SCE) for the approval of its intention to take over 100 percent of the shares of Industria deAlimentas La Europeana.

It was reported by the control body, which was previously known as the Supervisory Board for the Control of Market Power. In response to this newspaper’s inquiry, the controlling entity also indicated that La Estancia Investment Holding SL is part of the economic group to which the economic entity Procesadora Nacional deAlimentas CA (Pronaca) also belongs, and in turn currently owns 100% of the shares of the latter company.

La European Food Industry is a company from Cuenca founded in 1940 that produces meat products: sausages, salchichón, chorizo, salami, blood sausage, mortadella, pates, fine pork skins, ham, sausages, etc., even snacks from pork.

Pronaca invests 25 million dollars to increase the capacity of its factory for the production of feed for chickens and pigs by 50%

This newspaper consulted with Pronaca about the purchase process between La Estancia and La Europa, but indicated that they had no information and were not familiar with the operation. The company is no stranger to this type of business, in 2021 it received the approval of the control authorities for the implementation of a series of transactions consisting of the lease and purchase of the production assets of Avesca, Avícola Ecuatoriana CA

What was the process like from the authorization request?

After the company completed the documentation for the mandatory prior notification of the economic concentration, on March 6, the Agency, through the State Administration for the Supervision of Economic Concentrations, began the procedure for granting consent according to the provisions of the Supervisory Board. established in Article 21 of the Organic Law for the Regulation and Control of Market Power (ZORSPM) and 20 of the Ordinance for the Application of ZORSPM.

Pronaca has the green light to buy Avesca’s production assets

“Currently, the reported merger is in the resolution phase, in which the SCE First Instance Remedial Commission must decide whether to approve, deny or subject the merger between La Estancia to compliance. Investment Holding SL and Industria de Alimentas La European Cía. Ltda.”, informed the Supervisory Board that it has until October 30 to make a decision.

Why should the supervisor approve the operation?

The supervisory authority explained that ZORKPM defines the act of economic concentration as a change or takeover of a company or economic entity, i.e. through actions such as a merger, acquisition of shares or acquisition of assets, an economic entity takes control of another that was previously independent.

In this regard, corporate transactions that are configured as economic concentration operations must be subject to analysis and prior approval by the Supervisory Authority, when they meet one of the following conditions:

The supervisory authority for economic market competition, as in all cases of economic concentrations, must take into account in its decision that the proposed transaction does not create, change or strengthen market power, in accordance with Article 15 of the ZZKPM, or that there is a significant reduction , distortion or interference, clearly foreseeable or proven, in market competition, in accordance with Article 22 of the ZORCPM.

Ecuador exported pork for the first time and does not rule out being a supplier of beef from 2025.

For this purpose, a study and analysis of the structure of the relevant market(s) involved in the operation of economic concentration is carried out, in order to determine the state of market competition in each of them, the position of the participants in the transaction, the possible effects that could be generated and the efficiencies that could be produced.

In the event that the Supervisory Body approves the operations of La Estancia Investment Holding SL, it can conclude a contract with La Europeana and carry out actions before the appropriate control entities for the purchase and sale of the shares in question.