In brief
Recently, the Egyptian Competition Authority (“ECA”) issued a number of infringement decisions that signal a firmer approach to enforcement on several fronts. The ECA refused a settlement request from a food sector company that has already been fined by the Economic Court for failing to cooperate with the ECA. Moreover, the ECA has issued three infringement decisions in three bid rigging cases. In all of these three cartel cases, the ECA initiated criminal proceedings by referring the parties to the Public Prosecutor’s Office.
Key takeaways
The ECA’s decisions highlight the following key considerations:
- The ECA’s new Board of Directors signals a more active enforcement trend. Shortly after appointment, the new ECA’s Board, issued four decisions, covering
non-compliance with information requests, bid-rigging and price-fixing cartel cases. It has also initiated criminal proceedings in all the cases by referring the companies to the Public Prosecution. - The ECA appears to be closely monitoring compliance with the ECA’s Requests for Information (“RFI”) deadlines and, where such deadlines are repeatedly missed, this has resulted in an escalation by the ECA.
- In all three cartel cases, the ECA referred the parties to the Public Prosecutor’s Office. In both bid-rigging cases, the ECA also ordered the parties to immediately cease all coordination and exchange of information on tenders. This indicates that the ECA is resorting to a stricter enforcement policy.
- Public procurement is a clear enforcement priority to the ECA. Two of the three cartel decisions concern government tenders, at Alexandria University and the Supreme Media Council. This indicates the growing cooperation between various governmental authorities and the ECA.
In more detail
- Settlement rejection for failing to provide information to the ECA: According to the ECA’s press release, a food sector company repeatedly failed to respond to the ECA’s RFIs by the set deadlines. The ECA then initiated criminal proceedings by referring the case to the Public Prosecutor’s Office. Accordingly, the Economic Court of First Instance fined the company for violating Article 11 of the
Egyptian Competition Law (“ECL”). After the judgment, the company sought to settle with the ECA to end the criminal proceedings. However, the ECA rejected the request on the grounds that the company had repeatedly failed to cooperate. This is not a very common position that is taken by the ECA which used to be more willing to settle. - Bid-rigging in Alexandria University tenders: The ECA found that five companies supplying electronic marking devices and answer sheets to Alexandria University have colluded in five tenders by agreeing to which company would win each tender. The ECA referred the companies to the Public Prosecution and ordered them to stop all coordination immediately and to stop exchanging commercially sensitive information among each other.
- Bid-rigging in Supreme Media Council tender: The ECA investigated a number of tenders for structural reinforcement of TV transmission mast foundations in the Red Sea Governorate. The ECA found that two general contracting companies had coordinated by dividing the geographic areas among them. The ECA initiated criminal proceedings by referring both companies to the Public Prosecution. It also ordered them to stop immediately any explicit or implicit agreement or coordination on whether to bid in tenders and other procurement procedures.
- Price-fixing of freight rates at Suez and Red Sea ports: The ECA found that 11 members of the Cooperative Association for Shipping, Unloading, Transport and Container Handling at the Suez and Red Sea Ports had agreed to increase and fix truck freight rates for transporting goods to and from the ports. The agreement was reached at meetings at the association’s headquarters and was recorded in the association’s meeting minutes. The ECA initiated criminal proceedings by referring the said members to the Public Prosecutor’s Office.
Conclusion
To conclude, these decisions confirm the ECA’s active enforcement across both procedural and substantive violations. Clients are encouraged to review their own procedures and operations to ensure that their business is run in compliance with the ECL.
Moreover, clients are highly advised to take the ECA’s RFI seriously and not to ignore them in whole or in part. Once the ECA sends an RFI, it expects some form of a response to each of the requested items thereon.
Logaine El Shafie, Associate, has contributed to this legal update.
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