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Editorial

Egyptian Anti Monopoly Law

The Egyptian Law of Protection of Competition and Prevention of Monopoly Practices was promulgated by Law No. 3 of 2005 and entered into force on 16 May 2005.

This Law provides for the first time for rules that aim at the exercise of economic activity in a way that ensures freedom of competition and the prevention of putting restraints on it that causes it harm.

Article 4 of this Law defines the ‚Äúdomination‚ÄĚ of a certain market by providing that it is the capacity of a person (natural or juristic) whose part exceeds 25 per cent of this market, to have an effective influence on the prices or the quantity of the offer in it without his competitors being able to restrain such influence.

Article 5 of the Law provides that it applies to actions that are committed abroad if they result in prevention, restraint or harm to free competition in Egypt and which are considered as crimes in accordance to this Law.

Article 6 of the Law prohibits the agreements or contracts between competing persons in a certain market that result in the following:

The increase, decrease or fixing the sale or purchase prices of products subject of the transactions.

The division of the products markets, or their assignment on the basis of geographical areas, centres of distribution, categories of clients or products or seasons or periods of time.

Coordination in relation to entry or non entry in tenders, auctions, direct offers and other offers to supply.

The restriction of activities in the filed of industry, distribution or marketing or the restriction of distribution of services, or their types, or quantities, or putting conditions, or restrictions on their provision.

Article 7 provides that a person is prohibited from agreeing to contract with his suppliers or his clients if this results in restricting competition.

Article 8 of the Law prohibits those who dominate a certain market from the following:

1- Any action that results in the non ability to manufacture, produce or distribute a product for a duration or durations of time.

2- Abstention from conclusion of the sale or purchase deals with any person or refraining from transacting with him in a way that results in restricting his freedom to enter or leave the market at any time.

3- Any action between persons having a vertical relationship that results in the limitation of distribution of only one product on the basis of geographical areas or of distribution centres, or clients, or seasons or durations of time.

4- Making the conclusion of a contract or an agreement relating to the sale or purchase of a product conditional on accepting obligations or products that by their nature or by the commercial use of the products are not connected to it or to the original object of the transaction or the agreement.

5- Discrimination between sellers or buyers whose commercial situation is the same, in relation to the selling or purchasing prices or in the conditions of the transaction.

6- Refraining from producing or making available a scarce product even though its production or availability is economically possible.

7- Requiring those with whom he deals that they not allow his competitor the use of their utilities or services, even though such use is economically possible.

8- Selling products at a price that is less than their marginal cost or the average variable cost.

9- Obliging a supplier to refrain from dealing with a competitor.

Article 9 of the Law provides that it shall not apply to those public utilities that are managed by the State, and that the ‚ÄúProtection of Competition and Prevention of Monopoly Practices Authority‚ÄĚ, (i.e. the Authority) that is instituted in accordance to this Law may, at the request of the concerned persons, exempt form the area of prohibition all or part of the acts, provided in Articles 6, 7 and 8, by the public utilities that are managed by private law companies, if this ensures the public interest, or brings profits to the consumer that exceed the effects of limitation of the freedom of competition, in accordance to the standards and procedures provided in the Executive Regulation of this Law.

     Article 10 of the Law provides that the Council of Ministers may fix the sale price of one or more basic product for a defined period of time, after obtaining the view of the Authority, and that the Agreement concluded by the government in view of applying the fixed prices shall not be considered as an activity that harms competition.

Article 20 of the Law provides that where a contravention of Articles 6, 7 or 8 of the Law is proved, the Authority may order the contravening person to amend his position and remove the contravention immediately or within a certain period of time as decided by the Board of Directors of the Authority, otherwise the agreement or the contract that is contrary to Articles 6 and 7 shall be considered null and void.

The Board of Directors may pass a decision to stop the contravening actions immediately or after the above-mentioned period of time without amending the positions or removing the contraventions, all without prejudice to the rules relating to the responsibility resulting from those contraventions.

Article 21 provides that taking criminal action concerning any contraventions of this Law may only be carried out upon a written request of the concerned Minister or his deputy.

The Minister or the deputy may agree to a reconciliation concerning any of those actions before a final judgment is passed concerning them, against payment of a sum that is not less than double the minimum fine and not more than double the maximum of the fine, and the settlement shall result in the lapse of the criminal action in the particular case.

Article 22 provides that without prejudice to harsher penalties provided in other Laws contraventions of any of Articles 6, 7 or 8 of this Law shall be punished by a fine of not less than L.E. 30,000 and not more than L.E. 10 millions, and the court may, instead of pronouncement of a confiscation judgment, impose a substitute fine equal to the value of the product subject of the contravening activity.

Article 24 of the Law provides that the conviction and final judgments concerning the actions stated in Article 22 of this Law shall be published in the Official Gazette and in two daily well-known newspapers at the cost of the convicted person.

Finally, Article 25 of the Law provides that the person responsible for the actual management of the person who contravened the Law shall receive the same penalties as are imposed for the commission of actions contrary to this Law, if it is proven that he knew about them and that his dereliction of the duties imposed on him as a result of his management position has contributed to the commission of the crime.

The juristic person shall be jointly and severally responsible for payment of the monetary fines and the damages if the contravention was committed by an employee and in the name or for the interest of the juristic person.

KOSHERI, RASHED & RIAD

LEGAL CONSULTANTS & ATTORNEYS AT LAW

16, Maamal El Sokkar St., Garden City, Cairo 11451, Egypt

TELEPHONE: + (20 2) 7954795 (10 lines), 7959228, 7952096

FAX: + (20 2) 7958521

E-mail:

mailbox@krr-law.com

www.krr-law.com

Article on Egyptian Anti Monopoly Law By Dr. Tarek F. Riad Harvard Law School LL.M. (1982), S.J.D. (1985)

tarek.riad@krr-law.comManaging Partner of Kosheri, Rashed & Riadtarek.riad@krr-law.com Professor of Law & Deputy Director of Center René-Jean Dupuy

Special legal counsel to the speaker of The Egyptian People's Assembly

E-mail: samiakr@link.net

mailbox@krr-law.com

tarek.riad@krr-law.com

Web site : www.krr-law.com