The Wait is Over: Merger and Acquisition Control Takes Effect in Egypt
Competition Focus
Khaled AttiaPartner,Head of Dispute Resolution
Chahira BachaSenior Associate,Dispute Resolution
On April 4, 2024, the Egyptian Prime Minister issued Decree No. 1120 for 2024, amending certain provisions of Prime Ministerial Decree No. 1316 for 2005, which promulgates the Executive Regulations of the Egyptian Competition Law (referred to as the “Amendments to ECL Executive Regulations“). These amendments are set to take effect on June 1, 2024. Consequently, any transaction meeting the thresholds specified by the law and estimated to close after June 1, 2024, will be subject to pre-merger control/approval by the Egyptian Competition Authority (“ECA“).
In summary, the Amendments to the ECL Executive Regulations elaborate on the definitions outlined in the law for Economic Concentration within the context of Pre-Merger Control. Specifically, they adopt a strict and confined definition for the term “Material Influence.”
Furthermore, the Amendments prescribe the criteria to be considered in calculating the Annual Turnover and Combined Assets that trigger the notification threshold. They state that if annual turnover or assets are valued in a foreign currency, they should be converted to the Egyptian Pound using the official FX rate announced by the Central Bank of Egypt on the last day of the financial year of the concerned parties.
Additionally, the Amendments explicitly and exhaustively list the parties liable to notify the ECA of a potential transaction, as well as the documents to be submitted together with the filing form when applying for approval (i.e., a list of supporting documents). Unlike the regulations under the abolished post-notification regime, the Amendments specify that all supporting documents shall be in Arabic or accompanied by an Arabic translation if they are in a language other than Arabic.
Article 60 of the Amendments provides that the ECA may, with approval from the Cabinet, approve an Economic Concentration even if it raises concerns regarding the freedom of competition in the market, such as in the event of financial distress of the concerned party leading to its potential exit from the market, economic efficiency, and national security.
Finally, it is noted that while the treatment of transactions closing after June 1, 2024, is clear, uncertainty remains regarding transactions closing between April 6, 2024, and June 1, 2024. Hence, a release from the ECA in the upcoming days regarding this matter may be expected.
For further information,please contact Khaled Attia and Chahira Bacha.
Published in April 2024
