On 15 April 2020, based on a study presented by the Egyptian Competition Authority (ECA), the Prime Minister issued Decision No. 17/2020 fixing the prices of some products needed to combat COVID-19 for at least three months ending on 14 July 2020 (the Decision).

This Decision is the first successful implementation of Article 10 of the Egyptian Competition Law (ECL), which grants the Council of Ministers the right to fix the prices of strategic/essential product(s) for a certain period of time after the consultation of the ECA.

As a result, the Decision sets the prices of several sanitary and health related products that are primarily used in the efforts against the pandemic. However, it cannot be excluded that similar decisions may be issued for other “essential” products in the near future.

What has changed

  1. The Decision stated that certain products, namely different types and concentrations of ethyl alcohol, masks, gloves and other inputs used in the production of protective products, i.e. plastic bottles (Strategic Products), are considered strategic products according to the provisions of the Consumer Protection Law. Therefore, it is a crime to their distribution by hiding it, refusing to sell it or any other means.
  2. Moreover, the Decision obliged the processor of those products for non-personal use, producers, suppliers, distributors, sellers and all persons in a similar situation to notify the relevant health authorities of the quantity and types of those Strategic Products and set conditions for the sales of certain types of Strategic Products.  
  3. Finally, the Decision set the maximum prices for those Strategic Products and obliged all shops, pharmacies and any other places selling the Strategic Products to announce those prices in a place that is visible to the buyers.

What it means for you

Restricting the distribution of strategic products, failing to respect the conditions to sell certain products and failing to notify the relevant health authorities will be punishable under the provisions of the Consumer Protection Law with:

  1. imprisonment for a minimum of one year;
  2. a fine between EGP 200,000 and EGP 2,000,000 or the equivalent value of the products, whichever is higher;
  3. confiscation of the goods; and/or
  4. any persons affected by this violation has the right to claim damages before courts.

In the case of recidivism of the committed crime, the period of imprisonment will be between 2-5 years, and double the above-mentioned fine will be imposed.

Moreover, failing to comply with the maximum prices set in the Decision will be punished under the provisions of the ECL with a fine between EGP 100,000 and EGP 5,000,000.

Following the publication of the Decision, the ECA issued a press release encouraging all the parties concerned by the Decision to comply with its provisions and any party operating in any level of the supply chain of the market of these Strategic Products to report any abusive conduct from any entity holding a dominant position in the market of the Strategic Products. The fine for abusing a dominant position under the ECL is between 1% and 10% of the revenue of the products or services for the period of the violation. Where such a sum cannot be calculated, the fine shall not be less than EGP 100,000 and not exceed EGP 300,000,000 for each implicated individual. If a company receives a final judgement related to the ECL, its imports licenses would be revoked. 

Recommended action

  1. Parties concerned by the Decision should comply and report the types and the quantity of their stock from the products mentioned in the Decision to the relevant authorities. Moreover, they are required to respect the maximum prices set by the Decision.
  2. Parties who hold a dominant position in any of the markets of the products mentioned in the Decision are required to be extra diligent regarding their selling strategies for the next three months. The ECA has clearly warned market players from restrictions that may be adopted by dominant companies to restrict supply or refusing to deal.
  3. Pharmacies and any entities selling the products mentioned in the Decision are obliged to announce the prices of the products in visible places for consumers and to abide by the maximum prices set in the Decision.
  4. Players in other industries producing “essential” products (in particular in relation to pharmaceuticals and food supply) may start considering the initiation done by the ECA to consider the legality of potential horizontal cooperation agreements in order to enhance supply and increase economic efficiency in the Egyptian market during this crisis.
  5. While Article 10 of the ECL and the Decision refer to prices as being fixed, the ECA clarified that it will treat those prices as maximum prices. Therefore, market players would still be entitled to compete on prices while considering this ceiling.

For further information, please contact one of the lawyers below or your usual Baker McKenzie contact. You can also read our previous COVID-19 related alerts on our Baker McKenzie Beyond COVID-19 Resource Center.

Author

Mohamed Elfar is a Counsel in Baker McKenzie's Cairo office. He has been involved in numerous competition law cases involving cartels, abuse of dominance, compliance, price fixing and market division, as well as trade disputes related to customs, dumping and safeguards measure. Mohamed has extensive experience in the development and implementation of competition law compliance programmes for multinational companies in a wide range of industry sectors.

Author

Hania Negm is an associate in the Cairo office of Baker McKenzie. Hania focuses on antitrust and competition law, advising clients on antitrust litigation, cartels, investigations and dawn raids, monopolization, merger control and joint ventures. She is also well experienced in compliance law. Prior to joining the Firm on January 2018, Hania worked at the Egyptian Competition Authority where she was involved in numerous competition law cases.

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