New Egyptian import regulations(1) mean that import licences may be revoked if the holder violates Egyptian competition law and receives a final judgment from the Court of Appeal. As most multinational companies in Egypt import certain products, this new sanction could cause significant disruption to on-going business.
Any company that applies for a new or renewed import licence must submit an acknowledgement that it has never been convicted by a final judgment of any violation of the Egyptian Competition Law (ECL). Such infringements include not only anticompetitive practices, but also non-cooperation with the Egyptian Competition Authority (ECA) and failure to submit a post-merger notification.
Implications for clients
- Companies engaged in import activities and holding an import licence must comply with the new rules, or they risk losing their licence.
- Companies subject to a final criminal judgment (i.e. judgment from the Court of Appeal) for infringement of the ECL will have their import licences revoked.
- If a company loses its import licence because of such a conviction, it will not be entitled to reapply for (or to regain) this licence unless it settles the case with the ECA.
- Companies may chose to defend or to settle their case swiftly in order to avoid conviction by a final criminal judgment.
- Any company considering the acquisition in Egypt of a target company involved in import activities will need to check if the target has engaged in any anticompetitive practice (or contractually protect itself from such an eventuality). An import licence may be revoked after a deal is closed for infringements committed pre-closing.
What the new rules say
A company registering or renewing its registration in the importers' ledger must submit an acknowledgment that it has not been convicted by a final criminal judgment of a breach of the ECL (or of a number of other criminal infringements).
A company convicted by a final judgment of breach of the ECL will lose its import licence. The ECA must notify the General Organization on Exports and Imports Control (i.e. the government entity responsible for issuing and renewing import and export licences) of the judgment so that it can cancel the licence registration of the convicted company.
A convicted company will not be able to obtain a new import licence unless it settles the case. According to the ECL, a case may be settled before a criminal case is opened by the ECA for an amount not exceeding the statutory minimum fine for the infringement. Settlement can also take place after a criminal case is opened by the ECA, and in this case for an amount not less than three times the statutory minimum fine and not more than half the statutory maximum fine.
In addition, changes to the registration requirements for importers mean that non-Egyptians are now permitted to engage in import activities. Previously, such activity was only open to Egyptians. See our recent client alert.
Companies that do not comply fully with the ECL risk losing their import licences. Any company implicated in an ECL investigation (and especially if convicted at first instance) is advised to consider settling the case before a final judgment is delivered by the Court of Appeal.
(1) Law number 7 of 2017, amending Law number 121 of 1982 establishing the Importers Register, issued on 7 March 2017. The Executive Regulations to these amendments were issued by Ministerial Decree number 846 of 2017 on 1 June 2017.