Egypt: Competition Authority
The year 2015 marked the 10th anniversary of the enactment of the Egyptian Competition Law (ECL). Accordingly, the Egyptian competition authority (ECA) assumed responsibility for enforcing the provisions within the ECL, including regulating the markets, combating anticompetitive practices and disseminating competition culture. Driven by that responsibility, the ECA states in its vision statement that it aims to be ‘the key instrument for ensuring free competition in the market and prohibiting anticompetitive practices, in order to serve producer and consumer interests and enhance efficiency of the national economy’. In order, then, to achieve this vision, the ECA focuses on two main tools: competition enforcement and advocacy.
Over the past 10 years the ECL has been amended twice to strengthen its enforcement. The first amendments were in 2008 and were mainly focused on introducing harsher penalties, such as increasing the maximum fine from 10 million Egyptian pounds up to 300 million Egyptian pounds. Moreover, it introduced new fines on any entity failing to notify the ECA of mergers and acquisitions, and refraining from supplying the authority with any required data or submitting false information. The second amendments were introduced in 2014, modifying 60 per cent of the ECL. The 2014 amendments focused on four main areas. First, increasing the ECA’s independence; for example, it became solely the board’s decision to file for a criminal case to the prosecutor instead of the competent minister. Second, increasing the ECA’s credibility; for example, harsher penalties were set for ECA employees who breach confidentiality. Third, improving justice through the introduction of value-based fines (calculated from the annual turnover of the infringed product during the course of the infringement period) of a maximum of 10 per cent in vertical restraints or abuse of dominance violations and a maximum of 12 per cent in cartel violations. Fourth, enhancing the ECL’s effectiveness through the introduction of full leniency in cartel cases, where the ECA had the opportunity to apply the leniency programme in 2015 for the first time leading to acquiring more hard evidence, finalising the case efficiently within a short duration and encouraging more leniency cases to present before the ECA within the near future. In addition, enabling the ECA to take interim measures and obliging those concerned to seek the ECA’s advice when drafting laws and regulations that may affect competition has enhanced the ECL’s effectiveness.
Furthermore, the past couple of years have shown a significant increase in the number of proved violations, 60 per cent of which were proven during the period from 2013 to 2015. Cartel cases constituted 50 per cent of the violations, followed by abuse of dominance and vertical agreements. Among these were cases affecting important sectors such as insurance, construction, media and telecommunications. Regarding other competition law violations, a company was fined for the first time for refraining from supplying the authority with required data during the course of an investigation.
It is clear that the aforementioned amendments have taken the ECA to new levels of efficiency and effectiveness, giving it greater authority and increasing the credibility of its decisions.
Moreover, the ECA’s efforts did not stop there. In addition to enforcement, the ECA strongly believes that it has a well-defined role to play in advocating for competitive markets, both through regulatory interventions and enhanced collaboration and communication with different stakeholders. For example, the ECA is currently working closely with entities responsible for drafting laws and regulations that could affect competition, in order to guarantee their compliance with the ECL. Furthermore, in regard to targeting anticompetitive activities of state-owned enterprises, the ECA has successfully intervened to help the government remove restrictions on competition in a number of cases, such as when the Ministry of Trade and Industry opened the steel rebar market to new integrated plants and eased imports, which neutralised the monopoly pricing power of the dominant firm, reducing its market share by 10 per cent. Another example is the school uniforms case in which the ECA cooperated with the Ministry of Education to publish a set of rules, similar to a ministerial decree, applying to all private schools, preventing them from imposing given suppliers of uniforms on students, which results in high prices and poor quality. There are many other market-changing examples of the ECA’s achievements over the years, mostly in the sectors of natural gas, shipping services, tourism and agriculture.
The ECA’s advocacy efforts have been very significant, resulting in a number of major achievements, including emphasising the importance of protecting competition in the new Egyptian Constitution, as stated in article 27. Furthermore, the Cairo Economic Court ruled in favour of the ECA regarding the latter’s jurisdiction in monopolistic practices cases in the telecommunications sector. Consequently, the ECA’s advocacy efforts were recognised internationally when Egypt won first place in the World Bank contest for competition advocacy.
It is clear that over the last decade the ECA has been given more power to be able to better fulfil its mandate. However, the authority is still facing a number of challenges that hinder its effectiveness, such as the lack of competition culture awareness and the acquisition of the informal sector (unregistered economic players) on a large proportion of the economy, making it difficult to acquire the necessary data and information for studies and research conducted by the authority.
To conclude, the ECA has accomplished a lot over the last 10 years, however, there is still more to come and the authority has a new set of objectives to meet in the coming period. On top of these, future projects include the introduction of merger and acquisition control to the ECL, though in the meantime the ECA has already started working closely with the COMESA competition commission within their merger and acquisition framework; the increase of enforcement rates, especially concerning the failure to notify the ECA of merger and acquisition transactions that meet its threshold; the increase of enforcement rates in cartel cases through the newly introduced leniency programme; the enhancement of the ECA’s efficiency and effectiveness through, for example, a twinning programme with the EU; and the increase of international cooperation to enforce competition law on cross-border undertakings involved in anticompetitive practices that affect competition in the Egyptian market. In this last area, for example, the ECA has recently signed a memorandum of understanding with the Austrian competition authority.
The ECA’s advocacy work will continue to be on the front burner in the upcoming period, alongside the authority’s enforcement role. The ECA will continue to advocate increasing competition among various stakeholders and will do so in areas where the impact is greatest on the Egyptian people. The ECA strongly believes that it is within its mandate to do so, and that, through advocacy, it can advance the notion of greater competition much more than it ever could through enforcement alone.