Legislation Update: Egypt’s New Merger Control Provisions

Starting from 1 June 2024, all economic concentrations pending closing and meeting the thresholds stated by Egyptian Competition Law (“ECL”) will be subject to a notification obligation to the Egyptian competition Authority’s (“ECA”) for its prior approval.

Background:

On 29 December 2022, the ECL was amended to grant the Egyptian Competition Authority the power to review economic concentrations for prior approval before their implementation. The new merger control regime was not yet applied until the amendments to the Executive Regulations (“ER”) clarifying the implementation of the some provisions of the merger control regime were issued. Accordingly, the new ER amendments were issued on 4 April 2024, which will be effective starting 1 June 2024.

Notification requirement:

ECL defines economic concentrations as those which lead to a change in control or material influence of one or several persons, as a result of a merger, an acquisition, or a joint venture. Temporary acquisition of securities and internal restructuring are excluded under certain conditions. Economic concentrations must be notified to ECA if any of the thresholds (which are calculated on the basis of the domestic and worldwide turnover and value of assets) stated by the ECL are met.

The ER amendments provide further details on the definition of the concepts of economic concentration and material influence, as well as the method of determining the value of assets and the turnover for calculating the thresholds. They also provide for the details on the notification process (in particular: the person responsible for submitting the notification; the notification file requirements; and the notification fees categories).

Procedures:

According to ECL, once the notification file is complete, ECA begins its examination of the economic concentration. In this regard, the ECL states the timelines and the phases of the examination process. The ECL also states which decisions may the ECA adopt after each phase.

The ER amendments provide further details on the procedure and the decisions scope of ECA, in particular the instances considered as abandonment of the economic concentration that warrant dismissal of the notification file by ECA. The ER amendments also provide further explanation on the commitment proposal based on which ECA may grant conditional approval on the economic concentrations.

Substantive assessment:

The ECL prohibits economic concentrations that restricts competition. Moreover, the ECL states three instances where an anticompetitive economic concentration may be authorized after approval of the Cabinet of Ministers, namely on the basis of economic efficiency, failing firm defense and national security considerations.

In this regard, the ER amendments provide for the criteria to conduct the substantive assessment of the economic concentration. They also provide the criteria for the assessment of the economic efficiencies and the failing firm defense assessment.

Moreover, the ECL states the instance where ECA may intervene in examining an economic concentration after its implementation that does not meet the thresholds. In this regard, the ER provides for more detailed substantive and procedural criteria on the conditions for such intervention.

Framework for economic concentration in the sectors regulated by the Financial Regulatory Authority:

The ER amendments reiterated the specific procedures applicable to economic concentrations where the parties exercise an economic activity regulated by the FRA. In this regard, the notification file is submitted to the FRA instead of ECA, with stricter timelines. Moreover, the ECA’s decision regarding the economic concentration is considered as an opinion.