Competition Law in Egypt
Competition Law no.3 of 2005 (the “Law”) was issued to promote and seek to maintain market competitions. The Law aims to ensure that economic activity does not prevent the freedom of competition.
Competition law prohibits the abuse of dominant position, vertical and horizontal agreements as it damages competition between firms and exploits consumers.
What is the Dominant Position?
Dominant Position means the ability of the person whose market shares exceed 25% of the total relevant market shall have an effective impact on prices and/or volume of products without the competitors’ interference.
There are two main factors required for having the Dominant Position:
- owning more than 25% of the market shares;
- enjoy a position of economic strength to limit any possible competition.
Who is the Dominant Person?
Dominate Person may be any natural and/or juristic person regardless of its legal form, the method of funding and its nationality.
A Dominant Position may also be enjoyed jointly by two or more independent economic entities united by economic links in a specific market. This situation is called Collective Dominance.
Abuse of Dominant Position:
The legislator stipulated the following actions of abusive activities which are prohibited to be undertaken by the Dominant Person:
- Any act that would lead to non-manufacturing or non-producing or non-distributing a product, fully or partially for a certain period;
- Abstaining from concluding a sale or purchase agreements with any person or to stop dealing with any person in a way that limits the freedom to access, exit, stay in the market at any time.
- Any act that would restrict the distribution of a certain product based on the geographic area, distribution market, customers, sessions and period between persons having vertical integration.
- Concluding contracts subject to acceptance by other parties of supplementary obligations or products which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
- Discriminating between sellers or consumers by imposing unfair purchase or selling prices or by applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.
- Omission from producing or providing scarce products when its production is economically feasible.
- Not allowing dealers to provide competitors with their needed utilities or services when such utilization is economically feasible.
- Selling products at a price that is less than their marginal cost or their average cost (margin squeeze). Margin squeeze refers to the situation where an entrant has to buy a product with wholesale charges from a dominant firm to compete with it on the output market with retail charges. If a dominant firm sells to the entrant competitor at a price that is higher than the price it charges consumers for the final product, it will lead to a competitive disadvantage for the competitor entrant.
- Obliging a supplier not to deal with a competitor.
Egyptian Competition Protection Authority (the “Authority”)
Egyptian Competition Protection Authority is an Egyptian Governmental agency established under Law no.3 of 2005, which is under the authority of the Ministry of Trade and Industry.
The competence of the Authority is:
- Applying and developing the rules of free competition;
- Raising awareness to improve the level of market performance and achieve economic efficiency in a way that benefits the national economy and consumers; and
- Achieving an economic climate based on fair competition and free-market principles by applying the provisions of law.