Back to the complete issue
Wednesday, 24 March 2021

Are things getting ugly in the tobacco industry?

The tender for a license to establish Egypt’s second major tobacco company could face an antitrust probe after several tobacco players filed a formal complaint with the Egyptian Competition Authority (ECA) on the sale conditions, Masrawy reports, citing unnamed sources it says are in the know. Four major tobacco distributors and brand owners — JTI-Nakhla Tobacco, British American Tobacco Egypt, Imperial Tobacco and Al Mansour International Distribution Company — were invited to bid on the new license. They now argue that the new company’s effective monopoly on e-cigarettes and heated tobacco would be a breach of the Competition Protection Act. The ECA has yet to confirm that it has received the complaint, let alone whether it will go ahead with an investigation.

Why the grumbling? The broad strokes of the tender would see current state-owned monopoly Eastern Company owning 24% of the new entrant, which would also be required to price its popular brands 50% higher than Eastern’s. Companies also argue that they are only getting a chance to leap-frog into new products such as e-cigarettes and, therefore, not getting a fair chance to compete against Eastern, especially with only one license put up for grabs.

Foreign players are lobbying for a two-month extension on the deadline for bids to allow time for technical and feasibility studies — and also wait for possible change to the tender’s terms, according to a report in Al Mal’s print edition, which cites sources the newspaper says have knowledge of the matter. The current deadline for bids is 4 April.

Background: The Industrial Development Authority issued last week a tender for the license, which would (sort of) end Eastern’s monopoly on the tobacco industry. The authority invited several local and international players to compete in the tender, the results of which will be based on a point-count system. So far, an unnamed Emirati bidder has reportedly expressed interest.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.