Egypt is considering a premerger notification law that may subject global transactions to reporting requirements in Egypt. Egypt joins other jurisdictions in the region that have adopted merger control regimes, including the Common Market for Eastern and Southern Africa (COMESA), Israel, Morocco, Mozambique, Nigeria, Saudi Arabia, South Africa, and the United Arab Emirates.
The Egyptian Competition Authority (ECA) has recently announced plans to amend Competition Law (Law No. 3/2005) to introduce premerger notification requirements. The ECA is currently soliciting comments on the draft so the exact details and parameters of the amendments may change by the time they ultimately reach parliament. As currently drafted, the broad features of the proposed notification requirements are consistent with many regulatory regimes around the world. The notification would require standard information about the parties and the transaction, as well as a filing fee.1 Failing to comply with the notification requirements could subject the parties to substantial fines assessed as a percentage of the value of the combined entity’s turnover or assets.2
Upon notification, the ECA would be allowed to evaluate the competitive impact of the proposed transaction in a First Inspection Phase.3 If the ECA determines that the proposed transaction “raises a suspicion” of competitive harm, the ECA would initiate a Second Inspection Phase to obtain additional information.4 During that phase, the ECA could be empowered to obtain documents, data, and any other information necessary for its assessment of the transaction.5 In addition, the ECA would solicit comments on the proposed transaction from the public and any interested party amendments.6
This process could be mandatory for any merger, acquisition, joint venture, or “economic concentration” that meets certain jurisdictional thresholds based on the parties’ turnover or assets in Egypt and worldwide.7 The exact amounts of these thresholds have yet to be finalized. The ECA may also investigate transactions that do not meet the thresholds for a period of six months post-closing.8
Depending on the level at which the thresholds are ultimately set, the amendments could expose certain transactions around the world to reporting risks in Egypt. Parties contemplating transactions that involve an Egyptian component should monitor the progress of these draft amendments as they make their way through the legislative process. We will issue follow-up updates to this Client Alert when the details of the proposed amendments have been finalized.
1 Draft Amendment to Law No. 3/2005, Article 19(2)
2 Draft Amendment to Law No. 3/2005, Article 22(c). The Article as currently drafted does not specify whether the fine would be calculated based on the value of the parties’ global or Egyptian turnover and assets.
3 Draft Amendment to Law No. 3/2005, Article 19(4).
4 Draft Amendment to Law No. 3/2005, Article 19(4-5).
5 Draft Amendment to Law No. 3/2005, Article 19(4-5).
6 Draft Amendment to Law No. 3/2005, Article 19.4.
7 Draft Amendment to Law No. 3/2005, Article 2(e), 19(1).
8 Draft Amendment to Law No. 3/2005, Article 19.2.
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