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Monday, 29 March 2021

The latest on Eastern Co.

New, more competitive terms for the license to establish Egypt’s second major tobacco company could be introduced after several tobacco players filed a formal complaint with the Federation of Egyptian Industries’ tobacco division. The complaint looks to scrap the conditions booklet the Industrial Development Authority (IDA) had issued for the license auction, head of the Division Ibrahim Imbaby told Al Shorouk. The companies also want to see an independent committee bringing together the finance and public enterprises ministries, the Egyptian Competition Authority (ECA), the IDA and the Tobacco Division to lay down guidelines for the new conditions booklet, Imbaby added.

The complaint follows a separate grievance that tobacco players reportedly filed with the ECA last week over allegations of antitrust practices, arguing that the new company’s effective monopoly on e-cigarettes and heated tobacco would be a breach of the Competition Protection Act.

Background: The IDA issued almost two week agos 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. Current state-owned monopoly Eastern Company would own 24% of the new entrant, which would also be required to price its popular brands 50% higher than Eastern’s. So far, an unnamed Emirati bidder has reportedly expressed interest. Foreign players are lobbying for a two-month extension on the deadline for bids, which is set on Sunday, 4 April, to allow time for technical and feasibility studies — and also wait for possible change to the tender’s terms.

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