Legislation and jurisdiction

Relevant legislation and regulators

What is the relevant legislation and who enforces it?

The overarching competition regulation is promulgated by virtue of Law No. 3 of 2005 (the Competition Law). The Competition Law has since been amended on three occasions: in 2008, 2010 and 2014. The Egyptian Competition Authority (ECA) is entrusted with the task of overseeing the implementation of the Competition Law and is therefore considered as the primary designated regulator of competition in Egypt. Although the ECA administratively follows the Ministry of Trade and Industry, it is actually managed by a board of directors constituted by the Minister himself, which includes representatives of various ministries, independent experts and representatives of trade unions and industry associations. An amendment to the Competition Law was issued, in July 2014, that grants the ECA more autonomy by allowing its board of directors to initiate criminal procedures without the previous prerequisite approval of the Minister of Trade and Industry.

The Competition Law is not the only competition-related regulation in Egypt, nor is the ECA the only regulator. Sectors such as telecommunications and banking are also regulated by other regulators that work in close coordination with the ECA to ensure application of the principles of the Competition Law, albeit in wide and general terms, and also in the banking and telecommunications regulations. Yet, despite the overlapping jurisdiction of the various regulators with respect to competition matters, the merger notification regime instated by article 19 of the Competition Law remains applicable to all sectors under the sole jurisdiction of the ECA.

For telecommunications, the National Telecommunications Regulatory Authority (NTRA) applies articles 4 and 24 of Telecommunications Law No. 10 of 2003 to regulate competition and to ensure economic freedom in the sector. In fact, the NTRA controls mergers indirectly through reviewing the licence requirements of any given operator. Although there are no particular provisions in the Telecommunications Law regarding merger control, the NTRA usually assesses and evaluates any merger on the basis of its possible impact on competition. In the absence of specific penalties, the NTRA may simply block any merger by revoking or threatening to revoke the merging entities’ licences.

In the banking sector, the Central Bank of Egypt (CBE) exerts more power in managing competition in the sector and explicitly approving or disapproving transactions over shares in banks and financial institutions operating under the Banking Law umbrella. Basing itself on article 12 of the Banking Law No. 101 of 2004, the CBE has the right to review all applications to own more than a 10 per cent stake in a bank or any other percentage that would enable the acquirer to exert control over the management and the decision-making within said bank. The CBE retains all discretion to evaluate said application technically, financially and from a competition impact point of view. According to article 12, applications to own more than 10 per cent (or any controlling stake) must be presented to the CBE along with a long list of required documents (strategic plans, financial statements of the acquirer, credentials in the banking business, etc) 60 days prior to the date on which the acquisition is planned to take place. Historically, the CBE has demonstrated a high level of selectivity by imposing strict qualitative requirements before approving any merger or acquisition in the banking sector.

Finally, public utilities are excluded from the scope of application of the Competition Law either automatically by law, if they are managed by a public sector entity, or by explicit request if they are managed by private sector companies. If a private sector company runs a public utility, it should file an application with the ECA requesting its exclusion from the application of the Competition Law, and the ECA may grant this exclusion on the grounds of public interest alone.

Scope of legislation

What kinds of mergers are caught?

According to article 19 of the Competition Law introduced by Law No. 190 of 2008 as an amendment to Law No. 3 of 2005, each party - with an annual turnover of more than 100 million Egyptian pounds generated in Egypt - that acquires assets, proprietary rights, usufruct, shares or sets up a union, a merger, an amalgamation or a joint management transaction, must notify the ECA within 30 days after its date of completion. The scope and extent of applicability of the merger notification requirement is quite vast and may include a very wide range of transactions undertaken or contemplated by medium-sized and large businesses. Although the notification is simple and not disruptive to business, it remains a mandatory endeavour that requires a certain level of disclosure on a probably recurrent basis for active companies on the Egyptian market. No approval from the ECA is currently required, but this may change in the near future as a new law is expected to pass shortly. Although the text of the Competition Law itself suggest extraterritoriality, the ECA has initially published its notification guidelines explicitly excluding foreign-to-foreign transactions from the scope of notification even if said transactions have an impact on the Egyptian market. The notification guidelines have been however modified in June 2018 to impose notification to foreign transactions in case either party generates a turnover in Egypt in excess of 100 million Egyptian pounds. The new guidelines took effect on 1 September 2018. Despite the currently applicable post-merger notification framework instated by the Competition Law, the ECA has issued on 23 October 2018, a first-of-its-kind decision by virtue of which the ECA have explicitly requested Uber and it’s regional competitor Careem to obtain a pre-approval from the ECA before they complete their contemplated merger, which the ECA learnt about through media reports. In an unexpected turn of events, the ECA threatened to use the provisions of article 6 related to collusions and cartels to go after the two ride hailing giants if they go through with the notification without the approval of the ECA. The ECA approach is yet to be tested in court and may be ultimately deemed an overstepping of authority based on a wrongful interpretation of the Law. See subsequent questions for more on this.

What types of joint ventures are caught?

See question 2.

Is there a definition of ‘control’ and are minority and other interests less than control caught?

From a competition protection perspective, only the Banking Law specifies a threshold of an acquired stake above which the approval of the regulator is required. There are, however, in Capital Market Law No. 95 of 1992, provisions that oblige the acquirer of a stake exceeding 33 per cent of any listed company to launch a mandatory tender offer to acquire up to 100 per cent of the shares of said company. The requirement is intended for transparency purposes and to provide minority shareholders with an equal opportunity to cash in on their investments at the same level of economic benefit available to majority shareholders. The Financial Regulatory Authority (FRA) regulates the tender offer process and must grant its approval before any such process is launched. The tender offer approval requirements are listed in article 334 et seq of the Capital Market Law (as regularly amended) and the full application must be presented to the FRA, which must examine and approve, reject or modify the application within set time limits.

Thresholds, triggers and approvals

What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?

As mentioned in question 2, the threshold for the required notification of the merger is the size of the annual cumulative turnover of parties involved generated in Egypt. According to article 19 of the Competition Law, when the annual turnover of the acquirer or merging entity exceeds 100 million Egyptian pounds, the notification becomes mandatory and failure to make said notification is a criminal offence that is punishable by a fine ranging between 20,000 and 500,000 Egyptian pounds, which can be doubled in case of a repeated offence. The threshold for notification is 100 million Egyptian pounds in combined turnover generated in Egypt. Theoretically, there are no circumstances when a notification would be due if such quantitative threshold is not met; however, the recent Uber/Careem decision may suggest that notification may be conceptually required, if the two parties to the merger are the sole actors on a given market, regardless of the currently generated turnover.

Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?

The notification is mandatory by law. It should be served within 30 days of completion. In principle, no approval from the ECA is to be sought. However, the recent ECA approach, following the Uber/Careem decision, suggests that the ECA will force itself into having a say about certain high-profile transactions.

Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?

Based on the principle of extraterritoriality of the Competition Law, foreign-to-foreign transactions are theoretically supposed to fall within the scope of application of article 19 of the Competition Law if they are considered to have an impact on the Egyptian market.

The wording of the Competition Law itself is quite far-reaching and general with respect to the notification requirement. It does not state that the annual turnover that triggers the notification requirement must be generated in Egypt; it also does not state otherwise. However, the ECA latest guidelines explicitly include foreign-to-foreign transaction in the scope of notification. According to the guidelines, the threshold for notification is the turnover generated in Egypt alone.

Are there also rules on foreign investment, special sectors or other relevant approvals?

The acquisition of public-owned assets or shares in public sector companies by foreign investors (privatisation) is subject to the approval of the Cabinet of ministers and is usually granted after a thorough set of procedures. The acquisition of state-owned assets is generally subject to the Public Tendering Law and may not be authorised through a direct order without a duly publicised bidding process, unless in cases where public interest so requires.

Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

Transactions must be notified within 30 days of closing. The notification is merely informative in principle, and no clearance or approval would be a priori sought or granted. The sanction for failing to notify is a criminal penalty that ranges between 20,000 and 500,000 Egyptian pounds. In practice, the ECA actively seeks to enforce the provisions of article 19 and have brought many entities to admit breach and settle out of court against a fine that the ECA deems appropriate. The amount of settlement fine usually being considered negligible (ie, almost 1 per thousand of the minimum turnover threshold on average - based on ECA statistics published on the website: www.eca.org.eg) means that all of those accused in recent years have opted to settle out of court with the ECA. The alternative route would be litigious and involves being investigated by the Public Prosecutor and eventually referred to the criminal economic court, with all the associated reputational damage, cost and expense. Having said that, we note that the ECA have, through the Uber/Careem decision, requested that their merger must be approved before closing. The application will be reviewed by the ECA and a response would be given within 60 days from the date on which all supporting documents requested from the ECA are provided. The ECA emphasised in the above mentioned decision that its request to review and pre-approve the Uber/Careem merger is based on the fact that those two are the only actors in the relevant market and that their agreement to merge is a form of disguised collusion (penalised by a fine that does not exceed 500 million Egyptian pounds). The ECA based its decision on article 20(2) of the Competition Law, which allows the ECA to proactively anticipate and prevent all acts or transactions that the ECA reasonably suspects would have harmful effects on consumers and on the competition itself.

Which parties are responsible for filing and are filing fees required?

The acquirer of assets or shares and the merging entity of a merger process are required to make the notification. In case of joint management or joint venture, any of the parties to the transaction, especially those with an annual turnover exceeding 100 million Egyptian pounds are obliged to make the filing.

In the latter case, they may opt to undertake the process jointly or each on their own.

No filing fees are required, but lawyers’ services may be needed to follow up with the ECA and to make sure that the notification process has been duly completed to the satisfaction of the ECA after fulfilling all mandatory requirements and providing all requested information and documents. Partial or incomplete notification may not avert the risk of prosecution.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

The notification obligation is post-closing and therefore there is no suspending effect on the transaction itself. However, if the ECA get their way, certain transactions would have to wait for 60 days before being cleared by the ECA. Practically speaking, the ECA have gone after one case so far, which is the case of Uber and Careem. The ECA decision provided the sole ground based on which Uber and Careem know they had to obtain a clearance from the ECA or face prosecution for illicit collusion.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

Not applicable. When approvals of special regulators are required, such as the approval of the NTRA or the CBE, the parties attempting to execute the transaction before obtaining the mentioned approvals would be blocked at the share transfer level, which must be undertaken through the stock exchange even if the concerned target is not publicly listed. If in the unlikely scenario where a transaction takes place without due approval, the regulators always retain the right to cancel operational licences in case of unauthorised change of control (for banks, the threshold is 10 per cent - see question 1). In the Uber/Careem case, failing to notify and file for the ECA clearance prior to closing would expose the two undertakings to a criminal fine that can go up to 500 million Egyptian pounds to be doubled for ignoring the ECA decision requesting them explicitly to obtain the clearance.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

The obligation to notify is a post-closing obligation. In the case where the notification is explicitly requested to be made before closing, penalties would apply irrespective of whether the transaction has a local component or merely foreign-to-foreign.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Not applicable a priori. But if the ECA request a pre-notification, there would be technically no solution but either to challenge the ECA decision in court or file for their approval. According to media sources, Uber and Careem may have decided to follow the latter route.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

Other than the requirements stipulated under the Capital Market Law, which are intended to guarantee transparency and equal opportunity for both bidders and sellers, the standard notification requirements apply as far as the ECA are concerned. The approval of the FRA before the launching of the tender offer is mandatory and no public takeover bid may be launched without the terms of takeovers and all necessary disclosure being approved by the FRA and published as part of the invitation to sell shares to the offering buyer.


What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

According to article 44 of the Executive Regulations of the Law No. 3 for 2005, the notification must include the following information:

  • the name of the notifying party and their related parties, their respective nationalities, the addresses of their headquarters and their main places of business;
  • the details of the transaction along with its date and the legal position it creates;
  • the licences and approvals obtained from other regulators;
  • the annual turnover of the concerned entities; and
  • all supporting documents.

Failure to supply the required documents would be deemed as failure to meet the obligation to notify and is punishable by a fine not exceeding 500,000 Egyptian pounds. If false information is intentionally provided to the ECA, the fine can reach 1 million Egyptian pounds.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

If it comes to the knowledge of the ECA, either independently or through a third party’s complaint, or through its constant monitoring of the M&A market, that a transaction has occurred but not notified in accordance with the Competition Law or is contemplated in a manner to cause harm to consumers or competition, it would notify the concerned parties that they are being investigated for breach of article 19 of the Law, or in the latter case, issue a preventive decision forcing the parties to the contemplated transaction to file for the ECA approval prior to closing. The ECA would then initiate a criminal procedure against the infringing party and the file would be sent to the Public Prosecutor’s Office, which would confirm the infringement and would refer the matter to the competent court. In practice, all the accused so far have opted to settle the matter out of court with the ECA against payment of a fine to be determined by the latter.

What is the statutory timetable for clearance? Can it be speeded up?

There is no time limit in the law itself, but the notification process typically takes up to one week between the date the notification is filed and the date on which the ECA confirms receipt of said notification, if no further documents or information are required.

Substantive assessment

Substantive test

What is the substantive test for clearance?

Not applicable in general but when explicitly required via a decision of the ECA, the merger must not cause harm to consumers nor to competition.

Is there a special substantive test for joint ventures?

Not applicable.

Theories of harm

What are the ‘theories of harm’ that the authorities will investigate?

Not applicable in general but may applicable under the new ECA approach on selective transactions.

Non-competition issues

To what extent are non-competition issues relevant in the review process?

The industrial policy, the public interest, the national security, economic efficiencies, the user or consumer interest and the protection of minority shareholders are all factors considered when clearance and pre-approval are needed in specific sectors such as telecommunications and banking, as previously stated. Other than in those cases, those factors are not of consequence from a strict competition law perspective, as the approval and the clearance of the ECA is neither required nor granted.

Economic efficiencies

To what extent does the authority take into account economic efficiencies in the review process?

See question 22.

Remedies and ancillary restraints

Regulatory powers

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

Not applicable, except in certain fields of industry as discussed above. The NTRA and CBE may block the execution of the transaction in the cases where their written authorisation is required to proceed with said execution. To our knowledge, all banking and most telecommunication licences contain provisions that would require the approve of the CBE and the NTRA respectively. Having said that, the new approach of the ECA suggests that the ECA will try to give itself the power to block certain transactions if it deems that those transactions are harmful to the consumer and to the competition and to the labour market in general, as alluded to in one of the ECA press statements. The Law does not explicitly grant the ECA such power, but this would have to be confirmed through court once the ECA approach is challenged in court.

Remedies and conditions

Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?

Not applicable in general but the ECA may conceptually request certain remedies to allow certain transactions to go through. There is no precedent to confirm or deny the same. See question 24.

What are the basic conditions and timing issues applicable to a divestment or other remedy?

Not applicable in general and no precedent exists. See question 24.

What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?

Not applicable. See question 24. In specialist fields of industry, foreign-to-foreign transactions rarely come to the attention of the regulators, as the laws regulating those fields are strictly territorial by essence. However, if the regulators (including recently the ECA) conclude that a foreign-to-foreign transaction would fundamentally hurt competition or affect the strategic ownership and management of the locally based entities subject to their jurisdiction, the ECA would go after the foreign entities for colluding on the Egyptian market but no action would be directly taken against the foreign entity by the other regulators, although the operating licences of the local entities would be revoked or suspended for reasons related to transparency, public interest or national security, for example.

Ancillary restrictions

In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?

Not applicable in general and no precedent to support the ECA new perception and approach.

Involvement of other parties or authorities

Third-party involvement and rights

Are customers and competitors involved in the review process and what rights do complainants have?

Not applicable in general but the ECA new approach in the Uber/Careem case invited all stakeholders to express their feelings and concerns about the contemplated merger and gave them until April 2019 to present their feedback.

Publicity and confidentiality

What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?

Commercially sensitive information is not usually required for the purpose of the notification. Generally, the ECA seems to be reasonable in addressing the notifying parties’ concerns regarding sensitive commercial information. Furthermore, according to article 16 of the Competition Law, the ECA and all its employees are bound with a strict confidentiality obligation. Any ECA employee having access to commercial information of a given entity is also prohibited from working for a competitor of the concerned party for a period of two years from the date said employee gained access to the confidential information. The breach of the confidentiality of information about the filing party is a criminal offence.

Cross-border regulatory cooperation

Do the authorities cooperate with antitrust authorities in other jurisdictions?

Generally, yes. To the author’s knowledge there are a few protocols of cooperation that have been signed with various regulators in other jurisdictions, the details of which have not been publicised or made publicly available. Egypt is also party to the COMESA treaty and the COMESA notification theoretically supersedes and replaces the local Egyptian notification. In practice, the ECA would still require local notification but because, unlike the COMESA notification, the ECA notification is a priori post-closing, the ECA would require sight of the COMESA clearance as part of the required local filing documentation.

Judicial review

Available avenues

What are the opportunities for appeal or judicial review?

Because the sanctions are not administrative in nature and may only be imposed through a criminal court order, the means of appeal are those generally available for defendants in criminal law cases. The deadline for filing an appeal of a first-degree court ruling is 10 days from the date of issuance of said ruling.

Time frame

What is the usual time frame for appeal or judicial review?

There is no specific time frame, but in criminal law matters, procedures are fairly expeditious. Between the first-instance court and final appeal, the usual time frame is around 12 to 16 months.

Enforcement practice and future developments

Enforcement record

What is the recent enforcement record and what are the current enforcement concerns of the authorities?

The ECA is actively seeking to enforce article 19 on all sectors of industry (telecommunications, healthcare, building materials, transport, etc). A published list of investigated cases and their outcome are listed in the ECA activity report published on their website: www.eca.org.eg. The ECA has also issued a first of its kind decision to force Uber and Careem to obtain the ECA clearance prior to merging. Uber and Careem seem to be complying with the ECA decision, whereas they had a very obvious alternative of challenging the ECA decision in court because the ECA are trying to create a new notification framework without appropriate legislative cover.

Reform proposals

Are there current proposals to change the legislation?

The ECA has been lobbying for years to instate a legislatively supported pre-closing merger control regime and this may come to fruition shortly.

Update and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year?

The most important update is the ECA decision that ordered Uber and Careem to get their contemplated merger approved by the ECA prior to closing despite the fact that the law only provides for a post-merger notification. The ECA approach basically relies on two elements: (i) the power granted to the ECA to proactively prevent any act or transaction that it reasonably suspects will have an adverse impact on consumers or on competition (article 20 of the Competition Law); and (ii) its interpretation that the agreement to merger is a disguised agreement to collude on a given market to dominate the market and thwart competition.

Practically speaking, parties contemplating a merger are supposed to follow the normal post-notification process as required by law, but they will have to consider whether or not to obtain the approval of the ECA before closing if and once the ECA issue a decision explicitly requiring them to do so. In the only case on record so far, the ECA issued a decision to force Uber and Careem to file for pre-approval on the basis of the high-profile nature of the transaction and the fact that Uber and Careem are the only competitors in the ride hailing market. Uber and Careem have so far been reported to comply with the ECA decision and to file for their pre-approval, creating therefore a precedent in this respect. We are not sure whether or not Uber and Careem will challenge the ECA refusal to grant their merger the requested clearance and whether similar high-profile cases would follow on the ECA agenda.

For more on the subject, please visit: www.zulficarpartners.com/wp-content/uploads/2019/04/FRS-Final-TheUber_CareemCase.pdf.