Main features of the Amendments
The Amendments provide numerous details on the jurisdictional thresholds, powers of the ECA, merger assessment test and other details. We highlight below the main features:
Date of implementation
The Amendments will enter into force on the day following their publication in the Official Gazzette. The said publication is expected to take place during the month of December 2022. Shortly afterwards, the Executive Regulations will be issued and the ECA will start implementing the Amendments. It is understood that the Amendments will be enforceable from the first day and there will not be a transitional or grace period.
Under the Amendments, transactions which meet the either of the following turnover/value of assets thresholds must be notified to the ECA:
- If the combined turnover of the parties in Egypt exceeds EGP 900 million (approximately USD 37 million) and the turnover of each of at least two persons (i.e., companies or parties) exceeds EGP 200 million (approximately USD 8.2 million)
- If the global combined turnover of the parties exceeds EGP 7.5 billion (approximately EUR 305 million) and one of the parties to the transaction has turnover in Egypt that exceeds EGP 200 million (approximately USD 8.2 million)
The ECA reserves the right to intervene in transactions below these thresholds within one year of closing if there are indications that the said transaction has resulted in a restriction to the freedom of competition.
Notification is mandatory for transactions that meet the jurisdictional thresholds. Filing is suspensory i.e., the ECA's approval must be obtained prior to closing.
The merger notification must be submitted before the execution/completion of the transaction. This was clarified by stating that the notification must be submitted immediately upon signing a letter of intent or a memorandum of understanding or when parties enter into serious negotiations.
Merger assessment test
The test adopted by the ECA is quite vague and broad: the ECA can block a concentration if it restricts or harms the freedom of competition. Further clarity on the substantive assessment should be provided in the Executive Regulations.
The maximum fee stated in the Amendments is EGP 100,000 (approximately USD 4,000).
Exclusions from the Amendments
Activities that fall under the jurisdiction of the Financial Services Authority (FSA) are outside the scope of the ECA. However, while the approval is issued by the FSA, the FSA is required to obtain the opinion of the ECA prior to issuing its decision.
Activities that are regulated by the Central Bank of Egypt are also excluded. These transactions are governed by a completely independent set of rules.
First phase assessment may take up to 30 working days. This period can only be extended once for 15 working days if the parties submit remedies.
The second phase assessment can take up to 60 working days which can also be extended once for 15 working days if the parties submit remedies.
It is unclear whether the ECA will be able to stop the clock in case the file appears incomplete or not but this might be clarified in the Executive Regulations.
Under the Amendments, the ECA has various powers including, approving transactions unconditionally, or conditionally, or blocking transactions.
The ECA lists several penalties for those who engage in gun-jumping, failure to notify, violate any conditional acceptance or implements a blocked transaction. The sanctions include the following:
- The transaction will be deemed void.
- A criminal fine that is not less than 1% of the annual turnover/value of assets of the parties and does not exceed 10%, whichever is higher. If it is not possible to calculate those percentages, the fine will be not less than EGP 30 million (USD 1.2 million) and cannot exceed EGP 500 million (roughly, USD 20 million) for each implicated individual. Companies are jointly liable for the payment of the fines. It is not clear whether the turnover/value of assets is related to Egypt only or worldwide.
This is a welcome approach to set the fines rather than relying on turnover thresholds of the relevant product during the period of the infringement which has proved to be quite problematic in practice.
The Amendments generally seem to be influenced by international experiences, in particular, the approaches of the EU and COMESA. Further clarity will appear once the Executive Regulations are issued. It is still not clear what documents or exact information will need to be submitted to the ECA as part of the notification. In the meantime, parties, in particular those engaged in ongoing transactions, are highly advised to seek legal advice in order to ensure full compliance with the ECL.