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Monday, 20 June 2022

House discusses amendments to Competition Act

House gets down to business on Competition Act amendments: The House’s Economic Affairs Committee yesterday discussed giving greater powers to the Egyptian Competition Authority (ECA) under proposed amendments to the Competition Act. The amendments, which have been up in the air since last year, will regulate mergers and acquisitions and place them under the supervision of the ECA to prevent monopolistic practices in the market.

Want an M&A? You’ll have to get through the ECA first: ECA would have the power to approve or block M&As under the legislation, said Ahmed Samir, head of the House’s Economic Affairs Committee. Fending off monopolistic practices would require that the ECA is given more power to stand up to M&As that could be a threat to competition on the market.

How it’s done now: The ECA’s role is currently limited to raising red flags, but only after a transaction is concluded. Successive antitrust bosses have sought the power to approve or reject M&As for years now.

As to what constitutes an approved M&A, from what we’re hearing, the definition is shaky at best. We’re told that the ECA would only greenlight those transactions that help save defaulting companies or improve economic efficiency, without an explanation on what that would mean.

The amendments would also change the definition of “economic concentration,” a key principle in evaluating the potential market impact of a transaction. M&A transactions would be banned by the ECA that are found to restrict or cause harm to freedom of market competition, especially when the consolidation leads to a “controlling position” or reinforces an existing “controlling position,” Samir said.

This is all too vague for comfort: We’re still getting the same, general antitrust statements we’ve been hearing since the amendments were first announced and we’ve yet to hear any details on what constitutes bad corporate practice. Is it the unfair quashing of competitors or the fleecing of customers? Can I still acquire companies if I am the dominant player? Can I acquire a company and still become a dominant player? Where does that leave current market and sector regulators (FRA on capital markets)? As always, the devil will be in the details.

A positive: The House wants some transparency from the ECA: The House committee recommended that the ECA submit quarterly reports on its performance and targets to the chamber. It also wanted a report on the ECA’s supervisory powers and how much money was transferred to the state treasury from settling competition disputes in FY 2021-2022.

The ECA got a boost in finances recently, with the House committee approving an EGP 50.5 mn budget for the authority in the upcoming fiscal year that starts in July, up from EGP 40.8 mn this fiscal year.

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