Main features of the New Regulations

The New Regulations introduce numerous details on the scope of application, prohibited conducts, companies' liabilities dealing with strategic goods and other details. We highlight below the main features:

Scope of application

The New Regulations define the strategic goods by providing an exhaustive list of seven goods as follows: mixed oils beans, rice, milk, white sugar, pasta and white cheese. It is worth noting that the relevant products in the supply or distribution chain could be subject to the decision. Further, the New Regulations apply to all the companies operating in the producing, importation, manufacturing, packing and/or supplying of any of the aforementioned goods.

Prohibited conducts

The New Regulations refer to the Consumer Protection Law violations, whereas the withholding or refusal to deal conducts related to any of the strategic goods, in the supply and/or distribution chain, are prohibited and subject to the Consumer Protection Law penalties (mentioned hereunder). Further, companies dealing with strategic goods must notify the relevant body (the Ministry of Supply and Internal Trade) of the stocked strategic goods, its quantity (i.e., the whole supply chain), and the price changes to their price caps.

New company liabilities for dealing with strategic goods

Under the New Regulations, companies dealing with strategic goods must adhere to the following:

• Starting from 1 March 2024, the companies must include a price cap (maximum price) addressed to the end consumers on each strategic good, which must be labeled on the product in Arabic and possibly in another foreign language.
• In case of a change in the said end consumer price cap for any of the strategic goods, the company must submit a justifiable notification highlighting the reasoning behind the price amendments.
• The retailers must display the strategic good prices on the selling shelf. It shall be noted that the selling price must not exceed the end consumer price cap stipulated by the company.
• On a monthly basis, the companies must provide the Ministry of Supply and Internal Trade with comprehensive information including: product/good type, end consumer price-cap, date of production, quantity produced, local revenues, warehouse stock, list of the supplier/distributor dealing with the company and the selling price.
• The companies must prepare electronic tax invoices, including: quantity, production & expiry dates, factory price, end consumer price-cap and type of strategic good.

Penalties

The New Regulations refer to the penalties stipulated under the Consumer Protection Law, including imprisonment for a minimum of one year and/or financial penalty between EGP 100,000 and EGP 2 million, or the value of the goods subject to the violation. It is worth noting that either way, that the goods subject to the violation must be seized and the company must comply with the Consumer Protection Law and New Regulations. 

Main takeaways to market players

• Scope of application seems to be limited to packed finished goods. It does not extend to unpacked/bulk products except for the milk where the scope of application is extended to capture bulk and packed milk.
• The consumer price cap is determined by the supplier or importer and must be printed on the package of the product. The government is not involved in the setting of this price.
• However, changes to this price cap must be notified to the relevant governmental authority in due course.
• Market players in those markets and other related markets are witnessing an increased level of dawn-raids and enforcement. Higher scrutiny is expected in this respect.
• Importers must take note of the new mandatory changes as it will affect their labelling requirements. Shipments not complying with the required labelling requirements might be rejected by the Customs Authority.
• Importers should take into consideration the price cap (maximum price) to be set starting from 1 March 2024 when declaring their prices in the customs valuation required as part of the clearance procedures.
• Any violations to the provisions of the New Regulations will be punished by the penalties stipulated under the Consumer Protection Law mentioned above.

* * * * *

© 2024 Helmy, Hamza and Partners. All rights reserved. Helmy, Hamza and Partners is a member firm of Baker & McKenzie International, a global law firm with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.