5th of December 2022
Amendments to the Egyptian Competition Law are forthcoming! Here is what you need to know
Keywords: Competition
By: Partner, Heba Anwar Raslan and Associate, Farahnaz Abdelbary
Parliament’s General Assembly approved the general concept of the ECA’s Merger Control Bill (the “Bill”) today and will resume debate on the remaining Articles of the Bill, with a final vote expected tomorrow the 6th of December 2022. Pre-summer discussions at the Parliament’s Economic Committee, left several issues undecided, but its clear such issues were resolved in a record two days since we understand discussions were resumed only last week. Top issues included the competency of the Egyptian Competition Authority (“ECA”) vis-à-vis other regulators, most notably the Financial Regulatory Authority (“FRA”), turnover/value of assets thresholds, fees, exceptions to filing, and timelines. At its core, the Bill is designed to appraise the competitive elements of economic concentrations (transactions with a transfer or shift of control or material influence) as per international best practice. The ECA believes that its about time such a regime is introduced as a necessary tool to eliminate significant impediments to effective competition and incentivize investments.
The committee report and latest draft of the Bill were published last by some news outlets last Wednesday the 28th of November 2022.
With this in mind, let’s recap some of the main points tackled thus far and explore the direction these discussions might take.
What to expect now that Parliament will officially begin its GA debate?
- We expect that the Bill will pass this time. Following the Government’s announcement of their plan to exit as many as 79 sectors in the coming years and their establishment of the High Committee for Competitive Neutrality amongst other policy breakthroughs, the passing of this Bill may place Egypt in a more favorable light vis-à-vis international funding bodies such as the IMF and World Bank.
- It is unclear whether Parliament will grant a transitionary period following debates to give the business community time to assimilate the new regime in line with international best practice.
- The ECA’s advisory relationship with the FRA under the Bill is expected to be explored, particularly on fines and settlement issues. Under the Bill, the ECA has the power to impose penalties between EGP 30 million and EGP 500 million (USD 1,222,992 – USD 20,383,203) on parties receiving FRA clearances based on misleading information. This is a rather strange sanction considering the notification obligation is imposed by the FRA and not the ECA for the insurance and non-banking securities sector. Moreover, it is unclear if the ECA will have the capacity to request additional information directly from the parties or whether any inquiries related to such filings will be directed through the FRA. It will be interesting to see Parliament’s take on this matter.
- The passing of this Bill is expected to exponentially increase the role of the ECA in M&A review. Undoubtedly, the ECA’s internal processes and human capital will be put to the test. The ECA must ensure that a streamlined notification and review system is put in place to adhere to the stipulated timelines and fulfil the ultimate purpose of the Bill.
It is essential that the new regime prevents anticompetitive concentrations while not stifling advantageous deals. This concern is shared across the business and legal community. There are also some concerns regarding the timing of this Bill. The core question is whether Egypt is ready for such a monumental shift, given the current challenging global economic situation and resulting pressure on Egypt’s economy. Egypt’s efforts to attract investments is evident and adding a layer of approval could slow down transaction closing timeframes. Undoubtedly, a competitive market with lower concentration should would be beneficial however the stagaring question matter remains one of timing and processes. this begs question is whether the new regime is a rightly timed of whether the timing is right, and whether the procedure is the correct means to this end.
What could this mean to investors?
Parties to M&A transactions with an Egyptian dimension are advised to take note of the impending amendments to the Law. It is recommended that transaction agreements cater for the possibility of the added layer of antitrust review. These amendments could mean:
- Transactions for which agreements have been signed but have not closed prior to the commencement of the Bill will be caught by the new regime if they satisfy the relevant notification thresholds.
- Parties will need to consider economic and legal antitrust aspects of their prospective deals as per the Egyptian Law and ECA practice.
- Lengthier timelines for execution of transactions and the risk of restructuring or rejecting notified transactions.
- Increased financial burdens on notifying parties given the introduction of filing fees, although the cap recently introduced to the Bill could be helpful.
- Potentially more document-intensive requirements. We hope the ECA will rely more on e-submissions to facilitate the process.
- M&A parties to transactions with an Egyptian element will need to consider the economic and legal antitrust aspects to their prospective deals.
- Prevention of anticompetitive startup acquisitions and safeguards to innovation and R&D projects.
- Following the promulgation of the amendments, it is expected that there would be corresponding amendments to the executive regulations of the Law.
GOING FORWARD
One can expect that the ECA is looking to introduce further amendments to the key violation provisions of the Law to encompass more specific violations such as tacit collusion, price signaling, and collective dominance. At this rate, we could anticipate that wave of amendments to the Law may find its way to Parliament as early as next year.
We certainly hope the ECA engages stakeholders and experts through public and transparent consultations, ahead of amendments to the executive regulation and the introduction of future changes to the Law. We also think it is about time the ECA issues guidelines to provide clarity on the execution of the new regime.
A copy of the report with proposed amendments can be accessed here ECA Merger Control Bill 2022.
We love talking about competition – chat with us and watch this space for more….
The committee report and latest draft of the Bill were published last by some news outlets last Wednesday the 28th of November 2022.
With this in mind, let’s recap some of the main points tackled thus far and explore the direction these discussions might take.
What to expect now that Parliament will officially begin its GA debate?
- We expect that the Bill will pass this time. Following the Government’s announcement of their plan to exit as many as 79 sectors in the coming years and their establishment of the High Committee for Competitive Neutrality amongst other policy breakthroughs, the passing of this Bill may place Egypt in a more favorable light vis-à-vis international funding bodies such as the IMF and World Bank.
- It is unclear whether Parliament will grant a transitionary period following debates to give the business community time to assimilate the new regime in line with international best practice.
- The ECA’s advisory relationship with the FRA under the Bill is expected to be explored, particularly on fines and settlement issues. Under the Bill, the ECA has the power to impose penalties between EGP 30 million and EGP 500 million (USD 1,222,992 – USD 20,383,203) on parties receiving FRA clearances based on misleading information. This is a rather strange sanction considering the notification obligation is imposed by the FRA and not the ECA for the insurance and non-banking securities sector. Moreover, it is unclear if the ECA will have the capacity to request additional information directly from the parties or whether any inquiries related to such filings will be directed through the FRA. It will be interesting to see Parliament’s take on this matter.
- The passing of this Bill is expected to exponentially increase the role of the ECA in M&A review. Undoubtedly, the ECA’s internal processes and human capital will be put to the test. The ECA must ensure that a streamlined notification and review system is put in place to adhere to the stipulated timelines and fulfil the ultimate purpose of the Bill.
It is essential that the new regime prevents anticompetitive concentrations while not stifling advantageous deals. This concern is shared across the business and legal community. There are also some concerns regarding the timing of this Bill. The core question is whether Egypt is ready for such a monumental shift, given the current challenging global economic situation and resulting pressure on Egypt’s economy. Egypt’s efforts to attract investments is evident and adding a layer of approval could slow down transaction closing timeframes. Undoubtedly, a competitive market with lower concentration should would be beneficial however the stagaring question matter remains one of timing and processes. this begs question is whether the new regime is a rightly timed of whether the timing is right, and whether the procedure is the correct means to this end.
What could this mean to investors?
Parties to M&A transactions with an Egyptian dimension are advised to take note of the impending amendments to the Law. It is recommended that transaction agreements cater for the possibility of the added layer of antitrust review. These amendments could mean:
- Transactions for which agreements have been signed but have not closed prior to the commencement of the Bill will be caught by the new regime if they satisfy the relevant notification thresholds.
- Parties will need to consider economic and legal antitrust aspects of their prospective deals as per the Egyptian Law and ECA practice.
- Lengthier timelines for execution of transactions and the risk of restructuring or rejecting notified transactions.
- Increased financial burdens on notifying parties given the introduction of filing fees, although the cap recently introduced to the Bill could be helpful.
- Potentially more document-intensive requirements. We hope the ECA will rely more on e-submissions to facilitate the process.
- M&A parties to transactions with an Egyptian element will need to consider the economic and legal antitrust aspects to their prospective deals.
- Prevention of anticompetitive startup acquisitions and safeguards to innovation and R&D projects.
- Following the promulgation of the amendments, it is expected that there would be corresponding amendments to the executive regulations of the Law.
GOING FORWARD
One can expect that the ECA is looking to introduce further amendments to the key violation provisions of the Law to encompass more specific violations such as tacit collusion, price signaling, and collective dominance. At this rate, we could anticipate that wave of amendments to the Law may find its way to Parliament as early as next year.
We certainly hope the ECA engages stakeholders and experts through public and transparent consultations, ahead of amendments to the executive regulation and the introduction of future changes to the Law. We also think it is about time the ECA issues guidelines to provide clarity on the execution of the new regime.
A copy of the report with proposed amendments can be accessed here ECA Merger Control Bill 2022.
We love talking about competition – chat with us and watch this space for more….
Amendments to the Egyptian Competition Law are forthcoming! Here is what you need to know
5th of December 2022
Keywords: Competition
By: Partner, Heba Anwar Raslan and Associate, Farahnaz Abdelbary
Parliament’s General Assembly approved the general concept of the ECA’s Merger Control Bill (the “Bill”) today and will resume debate on the remaining Articles of the Bill, with a final vote expected tomorrow the 6th of December 2022. Pre-summer discussions at the Parliament’s Economic Committee, left several issues undecided, but its clear such issues were resolved in a record two days since we understand discussions were resumed only last week. Top issues included the competency of the Egyptian Competition Authority (“ECA”) vis-à-vis other regulators, most notably the Financial Regulatory Authority (“FRA”), turnover/value of assets thresholds, fees, exceptions to filing, and timelines. At its core, the Bill is designed to appraise the competitive elements of economic concentrations (transactions with a transfer or shift of control or material influence) as per international best practice. The ECA believes that its about time such a regime is introduced as a necessary tool to eliminate significant impediments to effective competition and incentivize investments.
The committee report and latest draft of the Bill were published last by some news outlets last Wednesday the 28th of November 2022.
With this in mind, let’s recap some of the main points tackled thus far and explore the direction these discussions might take.
What to expect now that Parliament will officially begin its GA debate?
- We expect that the Bill will pass this time. Following the Government’s announcement of their plan to exit as many as 79 sectors in the coming years and their establishment of the High Committee for Competitive Neutrality amongst other policy breakthroughs, the passing of this Bill may place Egypt in a more favorable light vis-à-vis international funding bodies such as the IMF and World Bank.
- It is unclear whether Parliament will grant a transitionary period following debates to give the business community time to assimilate the new regime in line with international best practice.
- The ECA’s advisory relationship with the FRA under the Bill is expected to be explored, particularly on fines and settlement issues. Under the Bill, the ECA has the power to impose penalties between EGP 30 million and EGP 500 million (USD 1,222,992 – USD 20,383,203) on parties receiving FRA clearances based on misleading information. This is a rather strange sanction considering the notification obligation is imposed by the FRA and not the ECA for the insurance and non-banking securities sector. Moreover, it is unclear if the ECA will have the capacity to request additional information directly from the parties or whether any inquiries related to such filings will be directed through the FRA. It will be interesting to see Parliament’s take on this matter.
- The passing of this Bill is expected to exponentially increase the role of the ECA in M&A review. Undoubtedly, the ECA’s internal processes and human capital will be put to the test. The ECA must ensure that a streamlined notification and review system is put in place to adhere to the stipulated timelines and fulfil the ultimate purpose of the Bill.
It is essential that the new regime prevents anticompetitive concentrations while not stifling advantageous deals. This concern is shared across the business and legal community. There are also some concerns regarding the timing of this Bill. The core question is whether Egypt is ready for such a monumental shift, given the current challenging global economic situation and resulting pressure on Egypt’s economy. Egypt’s efforts to attract investments is evident and adding a layer of approval could slow down transaction closing timeframes. Undoubtedly, a competitive market with lower concentration should would be beneficial however the stagaring question matter remains one of timing and processes. this begs question is whether the new regime is a rightly timed of whether the timing is right, and whether the procedure is the correct means to this end.
What could this mean to investors?
Parties to M&A transactions with an Egyptian dimension are advised to take note of the impending amendments to the Law. It is recommended that transaction agreements cater for the possibility of the added layer of antitrust review. These amendments could mean:
- Transactions for which agreements have been signed but have not closed prior to the commencement of the Bill will be caught by the new regime if they satisfy the relevant notification thresholds.
- Parties will need to consider economic and legal antitrust aspects of their prospective deals as per the Egyptian Law and ECA practice.
- Lengthier timelines for execution of transactions and the risk of restructuring or rejecting notified transactions.
- Increased financial burdens on notifying parties given the introduction of filing fees, although the cap recently introduced to the Bill could be helpful.
- Potentially more document-intensive requirements. We hope the ECA will rely more on e-submissions to facilitate the process.
- M&A parties to transactions with an Egyptian element will need to consider the economic and legal antitrust aspects to their prospective deals.
- Prevention of anticompetitive startup acquisitions and safeguards to innovation and R&D projects.
- Following the promulgation of the amendments, it is expected that there would be corresponding amendments to the executive regulations of the Law.
GOING FORWARD
One can expect that the ECA is looking to introduce further amendments to the key violation provisions of the Law to encompass more specific violations such as tacit collusion, price signaling, and collective dominance. At this rate, we could anticipate that wave of amendments to the Law may find its way to Parliament as early as next year.
We certainly hope the ECA engages stakeholders and experts through public and transparent consultations, ahead of amendments to the executive regulation and the introduction of future changes to the Law. We also think it is about time the ECA issues guidelines to provide clarity on the execution of the new regime.
A copy of the report with proposed amendments can be accessed here ECA Merger Control Bill 2022.
We love talking about competition – chat with us and watch this space for more….
The committee report and latest draft of the Bill were published last by some news outlets last Wednesday the 28th of November 2022.
With this in mind, let’s recap some of the main points tackled thus far and explore the direction these discussions might take.
What to expect now that Parliament will officially begin its GA debate?
- We expect that the Bill will pass this time. Following the Government’s announcement of their plan to exit as many as 79 sectors in the coming years and their establishment of the High Committee for Competitive Neutrality amongst other policy breakthroughs, the passing of this Bill may place Egypt in a more favorable light vis-à-vis international funding bodies such as the IMF and World Bank.
- It is unclear whether Parliament will grant a transitionary period following debates to give the business community time to assimilate the new regime in line with international best practice.
- The ECA’s advisory relationship with the FRA under the Bill is expected to be explored, particularly on fines and settlement issues. Under the Bill, the ECA has the power to impose penalties between EGP 30 million and EGP 500 million (USD 1,222,992 – USD 20,383,203) on parties receiving FRA clearances based on misleading information. This is a rather strange sanction considering the notification obligation is imposed by the FRA and not the ECA for the insurance and non-banking securities sector. Moreover, it is unclear if the ECA will have the capacity to request additional information directly from the parties or whether any inquiries related to such filings will be directed through the FRA. It will be interesting to see Parliament’s take on this matter.
- The passing of this Bill is expected to exponentially increase the role of the ECA in M&A review. Undoubtedly, the ECA’s internal processes and human capital will be put to the test. The ECA must ensure that a streamlined notification and review system is put in place to adhere to the stipulated timelines and fulfil the ultimate purpose of the Bill.
It is essential that the new regime prevents anticompetitive concentrations while not stifling advantageous deals. This concern is shared across the business and legal community. There are also some concerns regarding the timing of this Bill. The core question is whether Egypt is ready for such a monumental shift, given the current challenging global economic situation and resulting pressure on Egypt’s economy. Egypt’s efforts to attract investments is evident and adding a layer of approval could slow down transaction closing timeframes. Undoubtedly, a competitive market with lower concentration should would be beneficial however the stagaring question matter remains one of timing and processes. this begs question is whether the new regime is a rightly timed of whether the timing is right, and whether the procedure is the correct means to this end.
What could this mean to investors?
Parties to M&A transactions with an Egyptian dimension are advised to take note of the impending amendments to the Law. It is recommended that transaction agreements cater for the possibility of the added layer of antitrust review. These amendments could mean:
- Transactions for which agreements have been signed but have not closed prior to the commencement of the Bill will be caught by the new regime if they satisfy the relevant notification thresholds.
- Parties will need to consider economic and legal antitrust aspects of their prospective deals as per the Egyptian Law and ECA practice.
- Lengthier timelines for execution of transactions and the risk of restructuring or rejecting notified transactions.
- Increased financial burdens on notifying parties given the introduction of filing fees, although the cap recently introduced to the Bill could be helpful.
- Potentially more document-intensive requirements. We hope the ECA will rely more on e-submissions to facilitate the process.
- M&A parties to transactions with an Egyptian element will need to consider the economic and legal antitrust aspects to their prospective deals.
- Prevention of anticompetitive startup acquisitions and safeguards to innovation and R&D projects.
- Following the promulgation of the amendments, it is expected that there would be corresponding amendments to the executive regulations of the Law.
GOING FORWARD
One can expect that the ECA is looking to introduce further amendments to the key violation provisions of the Law to encompass more specific violations such as tacit collusion, price signaling, and collective dominance. At this rate, we could anticipate that wave of amendments to the Law may find its way to Parliament as early as next year.
We certainly hope the ECA engages stakeholders and experts through public and transparent consultations, ahead of amendments to the executive regulation and the introduction of future changes to the Law. We also think it is about time the ECA issues guidelines to provide clarity on the execution of the new regime.
A copy of the report with proposed amendments can be accessed here ECA Merger Control Bill 2022.
We love talking about competition – chat with us and watch this space for more….
