On 18 October 2021 the Egyptian Competition Authority announced that it intended to strictly enforce post-merger notification requirements under the Egyptian Competition Law. The notification obligation applies to any acquisition or merger where at least one of the parties has annual revenue in excess of EGP 100 million in Egypt.
Enforcement of the Post-Merger Notification Obligation
The Egyptian Competition Authority (ECA) announced on 18 October 2021 that it intended to strictly enforce the post-merger notification obligation under the Egyptian Competition Law.
According to Article 19 (2) of the Egyptian Competition Law (No. 3/2005), any company with an annual turnover exceeding EGP 100 million (around EUR 5.5 million) in Egypt that acquires shares, assets, or other property rights, or that engages in a combination with another enterprise, must submit a notification to the ECA within 30 days of the closing of the transaction. The EGP 100 million threshold is calculated on the basis of the company’s balance sheet in the financial year preceding the transaction. According to the most recent practice of the Egyptian Competition Authority, this also applies to acquirers who do not have a presence in Egypt. The notification requirement is triggered if any of the parties involved have a turnover in excess of EGP 100 million in the Egyptian market. The notification is submitted via a form document provided by the ECA.
Sanctions for Non-Compliant Companies
The ECA explicitly threatened to impose sanctions against companies that are not compliant.
This new policy is designed to address past non-compliance by transaction parties, particularly those without a presence in Egypt.
Article 22 no. 1 Competition Law permits the Competition Authority to impose a penalty of up to EGP 500,000 for any violation of the post-merger notification obligation. It remains to be seen how penalties will be enforced against parties without a presence in Egypt.
Pending Reform of the Merger Control Regime
At the same point in time, the ECA noted that the Council of Ministers approved an amendment of the Competition Law in November 2020 that will introduce for the first time a pre-merger notification.
The draft has been submitted to Parliament for deliberation. If signed into law, this amendment could potentially have far-reaching effects on M&A and joint ventures in Egypt.
If you would like more information about this topic then please contact us.
BERLIN | AMERELLER Rechtsanwälte | Kurfuerstenhoefe, Spreeufer 5, 10178 | Berlin, Germany | T: +49 30 609 895 660
CAIRO | MENA Associates in association with AMERELLER | Downtown: Immobilia Buildings | A Tower | 26 Sherif Pasha St. | Office No. 1029 | Postal Code 11613 | Cairo, Egypt | T: +20 2 23950442 T: +20 2 23936946
Sheikh Zayed office: Polygon Business Park | 7-3B1 | SODIC-West | Sheikh Zayed | Postal Code 12451 | Cairo, Egypt
This client alert is a public document for informational purposes only and should not be construed as legal advice. Readers should not act upon the information provided here without consulting with professional legal counsel. This material may be considered advertising under certain rules of professional conduct. Copyright © 2021