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Antitrust / Competition

Egypt: The Egyptian Competition Authority issues its largest price fixing cartel decision and expands the scope of commercially sensitive information

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In brief

Last week, the Egyptian Competition Authority (ECA) has initiated criminal proceedings against 162 broiler chick producers (“Cartel Members“) for agreeing to set the retail price of broilers chicks on a daily basis in Egypt. According to the ECA, this increased the prices of not only chicks but also consumer’s prices of chickens in Egypt.

The ECA has also issued a cartel decision relating to the advertising and publication market, by prohibiting the conduct of five advertising companies that agreed to refrain from participating in public bids. Both cases violated Article 6 of the Egyptian Competition Law No. 3 of 2005 (ECL).

In more details

  1. Broiler chicks price fixing cartel

The ECA investigation revealed three price-fixing agreements among 162 producers of broiler chicks, who agreed on the retail price of the broiler chicks to poultry farmers. In this regard, they have exchanged commercially sensitive information, including, inter alia, prices, costs, available volumes, feed prices, and other essential market-related information. Furthermore, the Cartel Members set a minimum resale price for their products to limit the choices available to poultry farmers/producers.

In addition, according to the ECA, the General Union of Chicken Producers was aiding and abetting the cartel by ensuring that the Cartel Members adhered to the agreed-upon prices.

According to the ECA, this cartel has resulted not only in the increase of the retail prices of chicks for poultry farmers but on the retail price of poultry to final consumers in Egypt.

The ECA initiated criminal proceedings against the 162 Cartel Members and imposed an administrative decision to suspend all agreements made between them and to prohibit them from exchanging commercially sensitive information.

  1. Media and advertising bid rigging case

In the second case, the ECA found that five advertising and publication companies agreed to refrain from participating in a number of public bids for advertising rights related to the 6th of October City Development Authority. 

The ECA ordered the violating parties to cease any agreements, discussions, or correspondence related to bid rigging of public bids. In addition, the ECA addressed the Chamber of Advertising and Publication, stressing the importance of complying with the ECL to its members.

Main takeaways

These two cases provide useful takeaways;

  1. This is the biggest cartel case in the ECA’s history where a criminal action was initiated against 162 market players.
  2. The ECA in this case has immediately initiated the criminal action against the chicks cartel. However, it has not done so in the advertising bid rigging case. This reconfirms that the ECA’s policy is not necessarily to give an opportunity to those violating the law to settle before the initiation of the criminal action.
  3. The ECA has confirmed its strict stance on exchange of commercially sensitive information.
  4. Bid rigging remains one of the most important violations in the last few years.
  5. The ECA statement that its findings indicated that these three chicks cartels have resulted in not only in the increase in the retail prices of chicks to poultry farmers but also to chicken prices to final consumers. This indicates that ECA was able to establish that the supply chain of chicken has passed on this cartel overcharge to end consumers. This increases the risk of private actions against the implicated chicks producers.

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Updated 2023 LOGO_Egypt Helmy Hamza & Partners Cairo

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Author

Mohamed ("Mo") advises multinational companies in a wide range of industry sectors, on antitrust and competition and trade law issues. In the antitrust and competition law area, he is experienced with cartels, price fixing, and market division as well as abuse of dominance and compliance issues. Mo also works extensively on trade disputes related to customs, dumping, and safeguard measures. Mo has additional expertise providing compliance advice to clients, including in the areas of anti-bribery, compliance investigations, dawn raids, and unfair competition. He provides assistance in mergers and acquisitions transactions to obtain regulatory approvals and advise on related compliance with competition laws. Advising and representing clients as Counsel (qualified in Egypt only) in Baker McKenzie's Toronto office, Mo joined Baker McKenzie in 2014 as a Senior Associate in the Cairo office. He has worked in the Firm's London office, where he worked on investigations and merger filings in the EU, Competition & Trade Department. Mo also worked at the Egyptian Competition Authority as a case handler and consultant. Mo holds an LL.M in international and comparative law from the American University in Cairo, an LL.M in EU law from Stockholm University, a GPLL.M in Canadian law from the University of Toronto, and a Ph.D in competition law from Queen Mary, University of London where he taught Competition Law for three years. He has authored several publications on competition law matters in a wide range of peer-reviewed international journals and periodicals.

Author

Mohamed El Baroudy is an associate at Helmy, Hamza & Partners, Baker McKenzie Cairo. Prior to joining the firm, he practiced at the Egyptian Competition Authority (ECA) as Senior Case Handler almost 5 years; where he gained practical knowledge and experience from an ECA's perspective on a wide range of competition related matters. He has also chaired several rounds of negotiation in Africa on behalf of the ECA.
In the Middle East and Africa, Baroudy has also developed and trained a number of competition authorities in enforcing competition law in the region; he has also advised several competition authorities on technical antitrust queries.
In Egypt, Baroudy investigated numerous violation competition cases across several sectors and worked on the Egyptian Competition Law Amendments Project. He was responsible for reviewing the Egyptian draft legislation related to competition to ensure its compliance. He has also provided several trainings to government employees at different governmental authorities to comply with the competitive neutrality policy and the detection of anti-competitive conducts, e.g. collusive practices in public bids.
He received his LL.M. from University of Hamburg, a Master in Economics from Cairo University and a Non Degree LL.M. Diploma from Loyola University in International Merger Control Regulation.

Author

Hania Negm is a senior associate at Helmy, Hamza & Partners, Baker McKenzie Cairo. She focuses her practice on antitrust and competition law, international commercial law and trade, and compliance and investigations. Prior to joining the Firm, she worked at the Egyptian Competition Authority, where she was involved in numerous competition law cases across several sectors, such as pharmaceuticals, automotive, food and beverage, information and communication technology, sports media rights, and entertainment. She was also involved in assisting the committees drafting internal regulations and draft laws. She received an LLB from Cairo University's Faculty of Law in 2016 before receiving a Master 1 in Business Law from Universite Jean Moulin Lyon III in 2017 and a Master 2 in Public Business Law after that. Hania was admitted to the Egyptian Bar Association in 2018.

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