Approval of the Executive Regulations to the Egyptian Competition Law

This endorsement represents a pivotal phase in the legislative evolution that commenced on December 29, 2022¹, with Egypt embarking on substantial overhauls to its competition law framework.  These changes are especially salient as they incorporate a compulsory pre-merger notification system.  Previously, parties engaged in certain transactions that met designated thresholds were required to inform the Egyptian Competition Authority (ECA) within a 30-day timeframe subsequent to the finalization of a transaction.

The newly approved regulations mark a transformative shift in Egypt’s approach to merger control.  The country is transitioning to a pre-closing notification regime, which will necessitate that parties to certain transactions seek approval from the ECA before they can finalize their transactions.  This is a significant change from past practice and is designed to allow the ECA to review and potentially address any competition concerns prior to the consummation of a deal, aligning with the approach that the majority of jurisdictions with merger control requirements now follow. 

The implementation date for the new pre-closing notification is set for June 1, 2024.  It is important to note that there will reportedly be no grace period following this date.  Consequently, any transactions that are not closed by May 31, 2024, and that meet the specified thresholds, will fall under the purview of the new framework.

Key Components of the New Framework

Thresholds

The framework delineates two principal thresholds for mandatory notification:

1. Domestic Threshold: Mandatory notification is required if, in the last fiscal year, the combined Egyptian turnover or the value of Egyptian assets of all transaction parties exceeded EGP900 million (approximately USD19 million). Additionally, each of at least two parties must have an Egyptian turnover exceeding EGP200 million (approximately USD4.2 million). 
2. International Threshold: Mandatory notification is required if, in the last fiscal year, the combined worldwide turnover or the value of assets held worldwide by all transaction parties exceeded EGP7.5 billion (approximately USD158 million). At least one party must have an Egyptian turnover exceeding EGP200 million (approximately USD4.2 million). Please note that the acquirer's Egyptian turnover alone can trigger the filing obligation.

Filing Fee

The new regime introduces a filing fee capped at EGP100,000 (approximately USD 2,100).  It is currently unclear if the payment of this fee is a prerequisite for the commencement of the review period.

Review process

Following submission of a notification, upon confirmation of a complete filing, the ECA will conduct a 30 business day review (extendable by additional 15 business days).

If a transaction is deemed to raise substantial competition concerns the authority may open a Phase II investigation and take additional 60 days business days (extendable by additional 15 business days) to issue a decision.

Gun jumping

Gun jumping violations could result in penalties ranging from one to ten percent of the greater of the violating party's turnover or asset value. It is currently unclear whether this relates to Egyptian or global turnover / asset values, and whether it would be imposed on the ultimate parent companies or direct acquirer(s). However, the current understanding is that the party bearing the responsibility to file would be the acquirer(s) (in cases of acquisitions) or any of the parties severally and jointly (in cases of joint ventures).  In cases where turnover or asset value is indeterminable, fines can range from EGP 30 to 500 million (approximately USD 63,000 – 11 million). 

Additional details, including the content of the application form, are anticipated to be elucidated in the Executive Regulations upon their publication.

Footnotes

[1] See Law No. 175 of 2022, published in the Official Gazette dated 29 December 2022