4 years in the life of the Egyptian Competition Authority

1. 4 years in the life of the Egyptian Competition Authority

2. Background – Egypt Experience • Egypt spent 14 years drafting the Competition Law; • UNCTAD, US and EU experts helped in the drafting; • The Law passed in February 2005; • The Law different from the recommended version; • The Board was appointed in August 2005; • Recruitment and Training started in January 2006

3. Background – Egypt Experience • Little local experience in Competition Law; • Used an UNCTAD report on different organization forms to select how we would start; • Used the ICN website to find out how competition commissions are organized • Invited many experts to help put us on track • Visited few agencies to learn on work processes • Active in attendance of workshops and conferences (ICN & OECD) to enhance the learning curve; • Technical staff sent on internships.

4. Egypt Experience Major amendments to the law passed in June 2008: • Increasing the penalties from $2 to $54 million, • Introducing partial leniency (50% reduction!), • Notification requirements added thresholds and penalties for not notifying, • Penalties introduced for refusal to provide information or providing false data. The Law still lacks the following: • M&A Control • Full leniency • Board formation, number and minimum voting requirement

5. Board Composition 15 members assigned for 4 years’ term renewable once • Full time Chair • 1 Vice President of the Counsel of State • 4 representing ministries (namely Industry & trade, Investment and Finance) • 3 Experts (selected by the Minister) • 6 representing the following Syndicates: Industries, Trade, Consumer Protection, NGOs, Labor, and the Bankers’ Association.

6. Resources Number of employees Year 2005 2006 2007 2008 2009 Technical Staff (50% lawyers) 1 7 12 18 25 IT & Communication 1 2 4 5 9 Support Staff 7 12 16 15 20 Total 9 21 32 38 54

7. Enforcement Number of Board Decisions Year 2006 2007 2008 2009 Total Infringements 0 2 1 2 5 No Infringements 3 3 6 9 21 Initiated studies 0 0 3 3 6 Opinion on Market Power 3 2 1 2 8 Total decisions 6 7 11 16 38 Number of Complaints 0 3 4 8 15

8. Enforcement # of court cases 1 Decision taken in October 2007 Prosecuted, Final Judgment at Court of Cassation in June 2009 # of cases referred to 2 Settled before reaching the court the prosecutor # of cases with 2 Board decided to advise the administrative companies to change their contracts. action If they do not change they would be taken to court.

9. Advocacy efforts Public Awareness Activity Seminars, Workshops & Press conferences: 2006 16 2007 20 2008 27 2009 10 Total 73

10. Most Important cases • The Cement Cartel Case First case referred to courts and first judgment rendered by the Egyptian courts in anti-trust offences. The Circuit court and the Court of Cassation affirmed the District court decision to fine a total of LE200 Million ($36M)to 9 companies. The fines highest ever in Egyptian courts were considered small versus the damage and caused the Parliament to review the maximum fine to $55M from $2M.

11. Most Important cases • The Sugar Cane Molasses Case A discrimination violation has been committed by a state owned company that is dominant in this product market. It was settled prior reference to court with no fines. The complainant decided to withdraw the complaint however, the company changed the behavior.

12. Most Important cases • The Steel Bars decision The main competition concern resided in the market structure. One producer enjoyed a cost effective scheme as a result of being the sole integrated plant. All others were cogging mills. Decision was that according to the abuse of dominant power stipulated by the law, the dominant firm has not infringed the law. Recommendations to remove barriers to entry dealt with customs, specifications, dealing with bureaucracy and licensing for new plants. All of which were adopted. Egypt now is expected to have five new integrated plants and opening the market and allowing importation of steel has affected prices downward.

13. Most Important cases • The River Transport decision Advisory opinion requested by the Ministry of Investment prior to privatizing the dominant government owned company. The decision was to recommend divesting the two services and to sell them separately: transportation and freight to avoid any tie in arrangement.

14. Issues and Concerns • Major effect of the global economic crisis is pressure on the government to interfere in prices bringing together competitors to discuss barriers and problems and in reality the discussion centers on prices! • Board reluctant to take decisions on collusion that could be seen as force majeur by the government and the market players. • The impact of the informal market and the subsidized goods market on our analyzes and defining the market shares. • Cases where the contracts and agreements are made by companies with no residence in the country but delivering the services locally – e.g.. satellite channels

15. Request from OECD • An OECD peer review is important at this stage. A peer review would serve for improved procedures and law enforcement. It will also help promote the required amendments to the Egyptian Competition Law.

16. Thank You www.eca.org.eg