A new Amendment of the Egyptian Competition Law No. 3 of 2005 ( “Amendment”) was approved by the Egyptian Parliament and is currently awaiting presidential ratification and is slated to come into effect three months following its publication in the Official Gazette.
The upcoming Amendment represents another upgrade toward a fair-competition market. Some of the new amendments therein, if applied correctly, would be a step forward in favor of local market players.
As the law has not yet been promulgated, the key pillars outlined in this alert remain subject to review and verification upon the law’s formal issuance.
1) Higher Merger Control Thresholds
The Amendment introduces a significant upward revision of the thresholds for the mandatory notification of concentrations, effectively narrowing the scope of transactions subject to Egyptian Competition Authority (ECA)’s approval.
a. For Domestic Transactions
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- Aggregate Threshold: The combined annual turnover or total assets of all parties in Egypt must exceed EGP 2.5 billion (from a previous EGP 900 million).
- Individual Threshold: At least two parties must each have a turnover or asset value exceeding EGP 500 million (from a previous EGP 200 million).
b. Cross-Border Transactions
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- Global Aggregate: The combined global turnover of the parties must exceed EGP 15 billion (from a previous EGP 7.5 billion).
- Domestic Impact: The Egyptian target entity must generate a local turnover exceeding EGP 500 million ( from a previous EGP 200 million).
2) Enhanced Penalties and Enforcement Regime
The new regime stiffens the financial consequences for non-compliance, whether for unauthorized mergers or anti-trust practices.
a. Procedural Breaches related to Mergers
Failure to notify, breach of conditional approvals, or closing a transaction despite a prohibition may incur fines capped at 10% of the parties’ combined annual turnover revenue of all parties, based on their latest consolidated financial statements. Where revenue does not reflect the transaction’s economic reality, the ECA may base fines on the transaction value or the total assets of the parties, whichever is higher.
b. For Anti-trust Practices
Horizontal agreements or cartel violations (price-fixing, market allocation, etc.) are capped at 15% of revenues generated from the specific breach over the full infringement period of the violation, and at EGP 700 million if revenues can’t be calculated.
In all cases, the fine cannot exceed 10% of total annual revenue of the violating party and all related parties, no matter how the value is calculated.
3) An Overhaul of the ECA with more institutional autonomy
This Amendment positions the ECA as an independent regulatory body with full administrative, technical and financial independence in accordance with Article 215 of the Constitution. The ECA shall now have enhanced administrative, technical, and financial independence, solidifying its role as the regulator and primary supervisor of market competition.
4) Introduction of Administrative Sanctions
Apart from the current purely criminal system, the amendment introduces administrative financial penalties and hence an administrative grievance mechanism allowing businesses to appeal regulatory decisions before they are referred for criminal prosecution.
For the regulator, this dual-track system means financial penalties and an immediate “cease and desist” orders to prevent market distortion before a lasting damage is sustained. For businesses, on the other hand, this provides a structural legal path for pursuing administrative resource on market issues before referral to court for criminal penalties.
5) Establishment of the Supreme Committee for the Support of Competition Policies and Competitive Neutrality Committee
The Amendment establishes this new high-level oversight body to ensure a level playing field between the public and private sectors.
The Committee will be chaired by the Prime Minister and will have the mandate of (i) review of all legislation and decrees issued by government bodies to make sure they are compliant with fair competition principles, (ii) setting guidelines to government entities for compliance with competition policies and neutrality; (iii) examining the regulatory status of the market where unnecessary restrictions on competition exist and suggest mitigation measures; and (iv) looking into government-related anti-trust practices whereby private entities may be able to petition the Committee to review or revoke specific exemptions or competitive advantages granted to state-owned enterprises (SOEs) if those privileges are found to jeopardize fair competition in the market.
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