in a nutshell
The Egyptian Parliament has approved amendments to Law No. 3 of 2005 on Competition Protection and Prohibition of Monopoly Practices (ECL).revision”). Until now, ECL only had a post-merger notification system and the Egyptian Competition Authority (ECA) had no power to evaluate, approve or block transactions. The amendments will be published in the Official Gazette and will enter into force in December 2022.
content
- Main features of the amendment
- comment
The Amendment provides numerous details regarding jurisdictional thresholds, ECA powers, merger assessment tests, and other details. Main features are listed below.
Implementation date
The amendments will come into force the day after they are published in the Official Gazette. The above issuance is expected to take place during December 2022. Shortly thereafter, an Enforcement Regulation will be issued and the ECA will begin implementing the amendments. The amendments are effective from day one and there is no transition or grace period.
Jurisdiction Threshold
Under the amendments, transactions that meet any of the following turnover/property value thresholds must be notified to the ECA:
- If the combined turnover of both parties in Egypt exceeds EGP 900 million (approximately USD 37 million) and the turnover of at least two persons (i.e. company or party) each exceeds EGP 200 million (approximately USD 8.2 million)
- If both parties have a total worldwide turnover exceeding 7.5 billion EGP (approximately EUR 305 million) and one party to the transaction has a turnover in Egypt exceeding 200 million EGP (approximately USD 8.2 million)
The ECA reserves the right to intervene in transactions below these thresholds within one year of closing if there are indications that such transactions have resulted in restricted freedom of competition.
Compulsory notification
Notification is required for transactions that meet jurisdictional standards. Your application is pending. That means he has to get ECA approval before he can complete the procedure.
notification timing
A Merger Notice must be filed prior to execution/completion of the transaction. This was clarified by stating that notice must be submitted immediately when an agreement or memorandum of understanding is signed, or when the parties enter into serious negotiations.
Combined evaluation test
The tests adopted by ECA are very vague and broad. ECA can block concentration if it restricts or impairs freedom of competition. Further clarification on substantive valuation should be provided in the enforcement regulations.
Application fee
The maximum charge specified in the Amendment is EGP 100,000 (approximately US$4,000).
Exclusion from Remediation
Activities under the jurisdiction of the Financial Services Authority (FSA) are outside the scope of the ECA. However, approval is issued by the Financial Services Agency, which must obtain his ECA’s opinion before issuing its decision.
Activities regulated by the Central Bank of Egypt are also excluded. These transactions are governed by a completely independent set of rules.
approval deadline
1st stage Evaluation may take up to 30 business days. This period may be extended only once for 15 business days if a party submits a remedy.
of second stage Evaluation may take up to 60 business days and may be extended once for 15 business days if a party submits a remedy.
It is unclear whether the ECA can stop the clock if a file appears to be incomplete, but this may be clarified in enforcement rules.
Evaluation authority
Under the Amendment, the ECA has various powers, including unconditionally or conditionally approving transactions and blocking transactions.
penalty
The ECA lists several penalties for those engaged in mass shootings, failure to notify, violation of conditional approvals, or conducting blocked transactions. Sanctions include:
- Transaction will be deemed void.
- A fine of 1% to 10% of the party’s annual turnover/asset value, whichever is higher. If these percentages cannot be calculated, the fine will be no less than 30 million EGP (US$1.2 million) and he cannot exceed 500 million EGP (approximately US$20 million) for each individual involved. Companies are jointly and severally liable for the payment of fines. It is not clear if the turnover/value of the property is related only to Egypt or globally.
This is a welcome approach to setting fines rather than relying on a threshold of sales of the relevant product during the period of infringement, which has proven to be quite problematic in practice.
The revisions generally seem to be influenced by international experience, particularly the EU and COMESA approaches. Further clarification will be provided when the Enforcement Rules are issued. It is not yet clear what documents or exact information must be submitted to the ECA as part of the notification. In the meantime, parties, especially parties involved in ongoing transactions, are strongly encouraged to seek legal advice in order to fully comply with the ECL.
