EGYPT Law and Practice Contributed by: Alex Saleh, Asad Ahmad, Khaled al-Khashab and Mounir Hany, GLA & Company
In all cases, the independence of the joint venture is not affected if all or the majority of its sales and pur - chases in the initial years or stages of its economic activity are with the controlling persons. In addition, the joint venture must be prepared to operate on a lasting basis. For example, if the dura - tion of the joint venture’s operation is not determined in the articles of association or any other agreements, the joint venture will be assumed to perform on a last - ing basis. However, if the duration of the joint venture’s operation has been determined, it must be assessed whether that duration is sufficient to consider the joint venture as set up to operate on a lasting basis accord - ing to the nature of the market. 2.11 Power of Authorities to Investigate a Transaction The ECA, with the approval of the ECA’s Board of Directors, reserves the right to commence an exami - nation of an “economic concentration” that does not exceed the Financial Thresholds if it possesses evi - dence or indications that could restrict or harm com - petition within a period not exceeding one year from the date of implementing the “economic concentra - tion”. The circumstantial evidence that can be considered is as follows: • restriction of technological development and inno - vation; • controlling the market by any act that may lead to an increase or decrease in prices; • reducing the quality of products; and • creating barriers to entry or expansion in the mar - ket. 2.12 Requirement for Clearance Before Implementation Under Article 22 bis d of the Egyptian Competition Law, a notifiable transaction cannot be implemented unless the ECA’s clearance is granted. Failing to com - ply with the obligation to notify in line with Article 19 bis a and Article 19 bis e of the Egyptian Competition Law is punishable with a fine of between 1% and 10% of the total annual turnover or value of assets of the parties to the notifiable “economic concentration” or
value of the transaction, whichever is higher, accord - ing to the latest audited consolidated financial state - ments of each concerned person. The fine should be between EGP30 million and EGP500 million. There is no mention under the Egyptian Competition Law or the Executive Regulations of a regularisation mechanism for notifiable “economic concentrations” implemented without proper notification to the ECA. If the ECA has concerns about implementing an “eco - nomic concentration”, its parties may submit a com - mitments offer to make it comply with the Egyptian Competition Law during phase I or phase II of the review, in line with Articles 19 bis c and 19 bis d of the Egyptian Competition Law and Article 57 of the Executive Regulations. This offer consists of one or more behavioural or structural remedies. The ECA then evaluates whether the commitments submit - ted should suffice to mitigate the harmful effects on competition that may result from the implementation of the “economic concentration”. If the commitments are approved, the ECA issues a conditional clearance decision that includes the terms of the agreement, the length of any applicable validity periods and a method for tracking the parties’ compliance. In cases of conditional clearances, the ECA may require the parties to the “economic concentration” to appoint a monitoring trustee. The monitoring trustee will be responsible for monitoring the compliance of the parties with the commitments/conditions set out in the ECA’s decision, subject to the ECA’s approval. 2.13 Penalties for the Implementation of a Transaction Before Clearance Gun jumping is prohibited under the Egyptian Com - petition Law (see 2.12 Requirement for Clearance Before Implementation and 2.2 Failure to Notify with respect to the penalties). 2.14 Exceptions to Suspensive Effect The ECA may authorise the implementation of the “economic concentrations” despite its anti-compet - itive effect via approval from the Cabinet of Ministers in line with Article 19 bis b of the Egyptian Competition Law and Article 60 of the Executive Regulations if the:
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