Egypt

The principal legislations governing merger control in Egypt are Law 3/2005 on the Protection of Competition and the Prohibition of Monopolistic Practices and its Executive Regulations, issued per Prime Ministerial Decree 1316/2005. Furthermore, the Egyptian Competition Authority (ECA) issued rudimentary Guidelines at the end of March 2024 that provide some insights into the ECA’s interpretations of the Competition Law and the Executive Regulations.

The Egyptian merger control regime is mandatory and suspensory. Prior to the implementation of the current pre-closing notification obligation, the Egyptian merger control regime was a post-closing notification regime. With the shift to a suspensory pre-closing notification obligation, the ECA’s attention to merger control has increased substantially. Also, while Egypt is part of the Common Market for Eastern and Southern Africa (COMESA), Egypt continues to disregard the COMESA merger control regime’s one-stop-shop principle.

The ECA is authorized to review mergers and make decisions on them. The ECA will also handle investigations into failure to notify and gun jumping. At the time of writing of this contribution, penalties had to be imposed by the competent Egyptian courts upon request by the ECA to do so. However, amendments proposed to the Competition Law that have been approved by the Egyptian House of Representatives and are now only pending ratification by the President will expend the ECA’s enforcement powers. Following implementation of the amendments, the ECA will be competent to directly impose administrative fines without involvement of the courts. More severe penalties will still require action from the courts.

The regime applies to all sectors but transactions in the financial and the telecommunications sectors. These are subject to sector-specific merger control review. Transactions in the telecommunications sector are subject to the jurisdiction of the National Telecommunications Regulatory Authority (NTRA) and transactions in the financial and banking sectors are subject to the jurisdiction of the Central Bank of Egypt (CBE) and the Financial Regulatory Authority (FRA) for merger control review purposes. Pursuant to the Competition Law, the ECA shall cooperate with these authorities on merger control matters. Over the past 12 months the ECA has expanded cooperation with the CBE and FRA to facilitate merger control review in the financial and banking sectors and harmonize the process with the general Egyptian merger control regime. The ECA has also thought to expand cooperation with the NTRA. Still, these affords are less developed than the ECA’s cooperation with the financial and banking regulators.

Egypt is a Member State of COMESA. As such, Egypt participates in merger control review by the COMESA Competition and Consumer Commission (CCCC) under the COMESA merger control regime. However, Egypt continues to disregard the COMESA merger control regime’s one-stop-shop principle. Hence, in the view of the ECA a filing under the Egyptian regime will still be required, even if a filing is made under the COMESA merger control regime. The recent changes to the COMESA competition and merger control regimes that established a mandatory and suspensory merger control regime under COMESA did not change this position of Egypt and the ECA. With Tunisa officially excepting the COMESA one-stop-shop principle in 2025, Egypt is now the last COMESA member country that does not observe it. Hence, parties will have to make a separate filing to the ECA, even if they make a filing to the CCCC for the same transaction.

The ECA cooperates closely with the CBE and FRA for merger control review in the financial and banking sectors as well as with the NTRA with respect to merger control review in the telecommunications sector. Cooperation with other domestic authorities is less established. Still, the ECA is actively engaging other public sector entities and authorities (e.g., as part of awareness efforts) to expand interagency cooperation within Egypt.

Furthermore, Egypt has been actively engaging with foreign competition authorities to expand cooperation. As a COMESA member country, the ECA is integrated in COMESA merger control review by the CCCC. Furthermore, the ECA has executed several memoranda of understanding (MoUs) with regulators in Africa (most recently with the Nigerian Federal Competition & Consumer Protection Commission (FCCPC)); in the Middle East (most notably with the Commission Department of the UAE Ministry of Economy and Tourism); as well as beyond, with several MoUs with domestic and regional regulators in Eastern Europe. The MoUs do provide for information exchange on ongoing merger control review and enforcement. Still, there is no evidence of active cooperation on merger control review or enforcement between the ECA and foreign competition regulators.

Furthermore, the ECA has played a key part in establishing the Arab Competition Network (ACN), to which the competition authorities of all Arab League member countries are party. The ACN has continuously expressed ambitions to expand interagency cooperation at their annual meetings, including establishment of a join database on merger reviews, antitrust investigations, and enforcement. However, this joint database has not been established, and neither have there been indications of ACN members exchanging information or otherwise cooperating on ongoing merger reviews or enforcement through the ACN thus far.

In April the Egyptian House of Representatives passed a law amending the Competition Law. As of the date of writing of this contribution the amendments were still pending ratification by the President. The amendments will provide certain changes to the Egyptian merger control regime. They will provide the ECA with authority to directly impose administrative fines instead of having to petition the courts to do so. Furthermore, the amendments will establish a new independent committee chaired by the Vice President of the State Council to review appeals against ECA decisions. Ongoing appeals will not have suspensory effect. ECA decisions remain immediately enforceable and binding. Appeals will only suspend enforcement unless a competent court orders otherwise. Finally, the amendments increase the merger control notification thresholds.

The Competition Law requires notification of any transaction that constitutes an economic concentration within the meaning of the Competition Law and meets the statutory notification thresholds. The Competition Law defines economic concentration as any change of control or material influence over one or several undertakings. Any transaction that leads to a party acquiring material influence, directly acquiring joint or sole control, increasing their influence from material influence to joint or sole control, or change from joint to sole control over an undertaking meets the test.

The Executive Regulations define material influence. They provide a non-exhaustive catalogue of matters that would give a natural or legal person material influence over an undertaking. The principal factor is the stake acquired. Pursuant to the executive Regulations, an individual or entity acquires material influence over an undertaking if they acquire at least a 25% stake in the undertaking or acquire 10% or more but less than 25% in the undertaking, and other circumstances provide the acquirer with further influence over the undertaking. Pursuant to the Executive Regulations, these other circumstances are the following. Meeting one of these will suffice to establish material influence:

• the distribution of voting rights in the undertaking is so fragmented that the acquirer can still influence strategic decisions and business objectives of the undertaking despite holding less than 25% in the undertaking;
• the acquirer obtains additional privileges concerning decision making in the undertaking, such as special voting powers and veto rights;
• common shareholding or common shareholders between the acquirer and the undertaking; or
• the acquirer gaining the right to appoint one or more persons to the board of directors or a similar body of the undertaking.

Where a person or entity acquires less than 10% in an undertaking, the acquirer is generally considered not to gain material influence over the target. However, an acquisition of less than 10% will still be considered as an acquisition of material influence, if the acquirer: through the acquisition becomes one of the three largest stakeholders in the undertaking; and at least one of the additional circumstances described above is fulfilled.

Control within the meaning of Egyptian law is the ability of one or more persons to exercise decisive influence over the strategic decisions of one or more undertakings. Such decisive influence will be established by:

• the ownership of all or the majority of shares, interest, or voting rights in an undertaking;
• the ownership or the right to use and exploit all or the majority of the assets of another undertaking;
• the right to appoint the majority of the members of the board of directors or to control the decisions of the board of directors or the general assembly meetings of an undertaking by other means;
• veto rights over strategic decisions such as budget, business plan, and material investments of an undertaking; or
• more than half of the members of the board of directors or the general assembly becoming the same persons in both the acquirer and the target.

Temporary acquisitions of securities by brokers for the purpose of resale within one year are not deemed economic concentrations and thus do not require notification under the Egyptian merger control regime, provided that the brokers do not exercise voting rights and do not take any measures that could affect the strategic decisions or commercial objectives of the target. Aside from this exemption, neither the Competition Law and their Executive Regulations nor the Guidelines generally exempt transactions leading to a temporary change of control from merger control filings.

The Egyptian merger control regime catches:

• mergers;
• whole or partial share acquisitions, provided that a partial acquisition leads to a change of material influence or control over the target;
• asset deals where a going concern is transferred with the assets;
• formation of joint ventures; and
• other transactions whereby control over an undertaking is transferred (e.g., debt transactions that lead to the creditor acquiring decisive influence over the borrower, management agreement, licensing agreements, and transactions that lead to the establishment of factual control).

Both equity and unincorporated joint ventures are caught by the Egyptian merger control regime.

Non-full-function joint ventures do not require notification. Neither the Competition Law nor the Executive Regulations include a definition of what constitutes a non-full-function joint venture under Egyptian law. However, pursuant to the Guidelines a joint venture is considered a full-function joint venture within the meaning of the Egyptian merger control regime, if the joint venture: engages in an economic activity beyond fulfilling a specific function of its controlling parents; has independent resources, including staff, funding, and business assets; and does not exclusively sell their products and services to or purchase their supplies exclusively from their parents.

Linked or successive transaction steps between the same parties may be treated as a single transaction, where the link is sufficiently material. Pure strategic links will typically not suffice. For transaction steps to be considered as part of the same, comprehensive transaction, they must be legally linked (e.g., through provisions creating interdependence of the transaction steps). Where different steps are considered to form part of the same, comprehensive transaction, they do not require separate notification.

Different, interrelated transactions such as asset swaps may be reviewed as single, multi-party arrangements. However, inter-conditional transactions between different parties will be reviewed as separate transactions.

The Egyptian merger control regime comprises two alternative notification thresholds. Economic concentrations require notification, if one of the two following thresholds is met:

• Domestic notification threshold. During the last fiscal year, the combined Egyptian turnover or value of Egyptian assets of all parties to the transaction was at least EGP 900 million (approximately USD 16.8 million) and the Egyptian turnover of any two parties was at least EGP 200 million (approximately USD 3.7 million) each.
• International notification threshold. During the last fiscal year, the combined worldwide turnover or value of assets held worldwide of all parties involved in the transaction was at least EGP 7.5 billion (approximately USD 140.1 million) and the Egyptian turnover of the target was at least EGP 200 million (approximately USD 3.7 million).

The Competition Law does not specify which party or parties must meet the local turnover/asset value requirement to trigger a notification obligation. In their Guidelines the ECA take the view that the international notification threshold can only be met where the target meets the Egyptian turnover requirement. The domestic notification threshold can still be met without target turnover in Egypt. Hence, where only one party to the transaction has Egyptian turnover, notification is only required if that party is the target. If the target has no turnover in Egypt, notification is only required if at least two other parties (i.e., two acquirer(s) and/or existing shareholder(s) remaining invested in the target post-closing) meet the Egyptian turnover threshold.

At the time of writing of this contribution, the House of Representatives had approved amendments to the Competition Law, which — among other matters — will amend the notification thresholds. Upon entry into force of the amendments, which currently are only pending ratification by the President, the thresholds will be as follows:

• Domestic notification threshold. During the last fiscal year, the combined Egyptian turnover or value of Egyptian assets of all parties to the transaction was at least EGP 2.5 billion (approximately USD 46.7 million), and the Egyptian turnover of any two parties was at least EGP 500 million (approximately USD 9.3 million) each.
• International notification threshold. During the last fiscal year, the combined worldwide turnover or value of assets held worldwide of all parties involved in the transaction was at least EGP 15 billion (approximately USD 280.2 million), and the Egyptian turnover of the target was at least EGP 500 million (approximately USD 9.3 million).

In any case — whether the transaction is an acquisition, merger, or joint venture according — no overlap is required to trigger a filing. The ECA will add all turnover and value of assets of all relevant parties — regardless of whether these are achieved in or related to the market relevant to the transaction or not — when assessing whether the thresholds are met.

The relevant parties for assessing whether the thresholds are met are:

• in an acquisition: the acquirer’s group and the target group;
• in a merger: the groups of the merging parties; and
• in a joint venture: the groups of the joint venture parties.

The ECA considers all entities and undertakings controlled by the same ultimate controller to form the “group”. For the target, the group is assessed downstream from the ultimate target entity. In private equity (PE) transactions all portfolio companies held across all funds managed and advised by the PE firm are considered the “group”.

How turnover of joint ventures is allocated is not explicitly regulated under Egyptian law. However, in practice the ECA has consistently accepted joint venture revenue to be attributed to the parties in the proportion in which the turnover is in fact distributed among the joint venture parties and recorded in their financial statement.

The ECA will consider the annual turnover of the parties. The applicable timeframe is the fiscal year used by the relevant parties. If the parties do not have a specific fiscal year defined, the Saudi General Authority of Competition (GAC) will consider the calendar year as relevant.

Under Egyptian law turnover is generally allocated to the place where the customer is located.

The ECA will assess whether the asset-based thresholds are met based on the value assigned to the relevant assets in the audited financial statements of the relevant parties. Asserts will typically be allocated to the jurisdiction where they are located. Movable assets (e.g., aircraft, ships, and other vehicles) will typically be allocated to the jurisdiction where they have their habitual base. However, registration may play a role.

Turnover and asset value recorded in currencies other than EGP must be converted to EGP using the average rate of the rates for buying and selling of the relevant currency published by the Central Bank of Egypt for the last day of the last completed fiscal year of the relevant party.

This is not applicable in Egypt.

There is no exemption for foreign-to-foreign transactions.

Where the notification thresholds (see Question 3.1, above) are met, no local nexus test must be met. Notification is mandatory regardless of local nexus.

Neither the Competition Law, Executive Regulations, nor the Guidelines provide for specific exemptions. However, in certain cases the ECA may exempt a transaction from the application of the Egyptian merger control regime on a case-by-case basis. The ECA may — with the approval of the Council of Ministers — exempt transactions that meet the notification requirements from the filing obligation, if:

• the target is under financial distress, the transaction is aimed to ensure the ongoing operations of the target in the market, and the alternatives to the transaction pose more severe risk to competition than the transaction;
• the economic efficiencies caused by the transaction outweigh the transaction’s negative effects on competition and provided that: the efficiency gains are verifiable; the efficiency gains can only be achieved through the transaction; and the efficiency gains lead to benefits for consumers; or
• the implementation of the transaction is necessary for reasons of national security.

The ECA has authority to call in deals that should have, but have not, been notified. In addition, such failure to notify may incur penalties if the deal is closed prior to clearance from the ECA.

The ECA does not have authority to call in below threshold transactions.

The Competition Law, Executive Regulations, and the Guidelines do not establish a longstop date for review of a merger or the use of call-in powers. The matter has thus far not been tested in practice.

Theoretically, parties can file voluntarily where the thresholds are not met. However, the ECA will reject the notification as not required and will not review the transaction where the thresholds are not met.

Where the thresholds are met, notification is mandatory and suspensory. The ECA may — with the approval of the Council of Ministers — exempt transactions that meet the notification requirements from the filing obligation, if:

• the target is under financial distress, the transaction is aimed to ensure the ongoing operations of the target in the market, and the alternatives to the transaction pose more severe risk to competition than the transaction;
• the economic efficiencies caused by the transaction outweigh the transaction’s negative effects on competition and provided that: the efficiency gains are verifiable; the efficiency gains can only be achieved through the transaction; and the efficiency gains lead to benefits for consumers; or
• the implementation of the transaction is necessary for reasons of national security.

The Egyptian merger control regime is suspensory. Hence, the parties are prohibited from implementing the transaction prior to clearance from the ECA. Exchange of competition relevant information — such as information on pricing, capacity, and customer division — will be deemed early implementation. Furthermore, the parties are barred from effecting changes to the organization and governance of the target or coordinating operations prior to clearance.

Neither the Competition Law nor the Executive Regulations address carve-outs, hold-separate arrangements, or other means to close a transaction globally prior to clearance in Egypt.

In an acquisition, both acquirer and target are responsible for making the filing. In a merger, the merging parties are responsible for making the filing. In a joint venture, all joint venture parties collectively are responsible for making the filing.

The filing fee is capped at EGP 100,000 (approximately USD 1,868). In addition to the filing fee the parties must commit to paying the cost for publication of the transaction. The ECA currently estimates these to be approximately EGP 50,000 (approximately USD 934) and requires the parties to submit a check in this amount with the filing. Where the actual costs incurred deviate, the difference will be charged to the parties (where the actual costs are higher) or reimbursed (where the actual costs are lower).

Filing can be made before signing based on a term sheet, letter of intent, or similar instruments, provided these are sufficiently detailed to allow the ECA to examine the potential impact on competition of the transaction. Where the instrument is not sufficiently detailed, the ECA may accept filings with term sheet or similar instrument together with the draft transaction agreement. Where no transaction agreement exists, the ECA will accept alternatives. For example, in cases of public takeover bids the published offer document will typically suffice.

There is no deadline for submission of a notification. However, the transaction may not be implemented prior to clearance from the ECA.

Filings must be made using the filing forms issued by the ECA. There are separate filing forms for simplified and regular filing. In addition to the filing form the parties must submit general corporate documents, audited consolidated financial statement or — where no such financial statements are available — revenue statements issued by the parties, powers of attorney of the notifying parties, corporate structure charts, reports and other materials prepared by the parties for their board of directors on the transaction, and letters by the parties confirming that they will pay the filing fee and publication costs.

The powers of attorney must be legalized according to the procedure bilaterally agreed between Egypt and the jurisdiction where the powers of attorney are issued. All other documents can be submitted as simple companies. All documents — as well as the filing form — must be submitted in Arabic. Where the original document is not in Arabic, the document must be submitted in the original language accompanied by an Arabic translation.

There is a simplified procedure available where certain criteria are met. The simplified procedure applies where:

• the domestic notification threshold is met, and the combined annual Egyptian turnover or value of Egyptian assets of the relevant parties is under EGP 2 billion (approximately USD 37.4 million); it remains to be seen whether this threshold will be adjusted following the amended notification thresholds entering into force;
• the international notification threshold is met, and the target has less than EGP 500 million (approximately USD 9.3 million) Egyptian turnover; it remains to be seen whether this threshold will be adjusted following the amended notification thresholds entering into force;
• the transaction concerns the establishment of a joint venture, an acquisition of a target by multiple acquirers, or an acquisition of part of the shares in a target, that is not active and will not in the foreseeable future become active in Egypt;
• the transaction concerns the establishment of a joint venture, an acquisition of a target by multiple acquirers, or an acquisition of part of the shares in a target, and there is no horizontal or vertical overlap or other connection between the joint venture/target and their parents/owners;
• conglomerate economic concentrations between persons operating in markets that are not horizontally, vertically, or otherwise related; and
• acquisition of sole control over an undertaking where the acquirer already had joint control over the target prior to closing.

The review period under the simplified track is 20 business days. Furthermore, there is a shortened filing form for the simplified procedure. Most notably this short filing form does not require the parties to disclose prior transactions.

Pre-notification discussions are not strictly required but common. Effectively, the ECA will frontload the review and conduct all or most of their material review prior to declaring completeness of filing and starting the statutory review period. In practice, the ECA will request extensive information and ask substantial questions even in non-problematic transactions. Accordingly, the pre-notification discussions will typically be lengthy and take between 30 and 60 business days to conclude.

The review process distinguishes between simplified review, phase 1, and phase 2. The statutory review period is

• 20 business days in simplified review;
• 30 business days in phase 1, with the option to extend by an additional 15 business days where remedies are discussed; and
• 60 business days in phase 2, with the option to extend by an additional 15 business days where remedies are discussed.

Requests for information (RFIs) do not automatically stop the clock and the ECA cannot declare them to stop the clock.

Following declaration of completeness, the ECA will make an announcement of the notification received that will start the statutory review period. Following the announcement a 15 business days’ waiting period applies during which third parties may raise concerns or objections.

The review period is calculated based on business days in Egypt. Hence, weekends and public holidays do not count towards the review period.

Clearance for a non-problematic deal from signing to clearance by the ECA — including time needed to prepare the filing documents and procure formalization and translation of supporting documents (where required), pre-notification discussions, and material review on the clock — will typically take:

• best case: 40 to 55 business days;
• base case: 55 to 80 business days; and
• downside case: 80 to 90 business days.

The interaction between public offer rules and the merger control process is not explicitly addressed by the Competition Law, Executive Regulations, or Guidelines. In practice, the ECA will not apply special consideration for public mergers and strictly apply the standstill obligation of the Egyptian merger regime. Hence, parties must manage timelines to avoid gun jumping under Egyptian law. Where this is not possible, case-by-case considerations may be available. However, these will be difficult to negotiate with the ECA.

Upon confirming completeness of filing, the ECA will make an announcement of the filing received. Following this announcement there is a 15 business days’ waiting period during which concerned third parties may voice concerns or objections. Furthermore, the ECA may invite third-party participation in the form of market studies, direct engagement of specific third parties, or Q&As.

The ECA has the power to require internal documents to be disclosed or request the parties to respond to specific questions. In non-problematic deals the ECA will typically still issue material RFIs. When drafting their RFI, the ECA will typically reach out to counsel to discuss individual questions they wish to raise. Where these can be answered at short notice, they will not be included in the formal RFI. All questions that cannot be answered ad hoc over the phone will be issued as part of a formal RFI.

All commercially sensitive information provided in a filing is regarded as confidential. The ECA will allow parties’ input on information on the transaction and the parties to be made public (e.g., in the announcement of the notification received). However, ultimately, the ECA reserves the right to determine the announcement text, provided it does not include commercially sensitive information.

The ECA assesses transactions based on the criterion of whether the transaction is likely to substantially lessen competition in the relevant market. The test is forward looking and based on a counterfactual assessment. Hence, the ECA will consider the likely competitive situation in the relevant market with the transaction being implemented as opposed to the likely competitive situation in the relevant market without the transaction being implemented.

The ECA primarily focuses on competition matters. However, some basic public interest and national security considerations may play a secondary role in the ECA’s assessment.

Countervailing efficiencies or benefits may be taken into consideration in the ECA’s assessment. While they will play a role in the overall assessment by the ECA, competition concerns are the primary focus of the assessment and countervailing efficiencies or benefits are less likely to sway the decision of the EAC.

In non-problematic transactions the ECA typically provides some level insight into their thinking. Often the ECA will seek meetings — typically held remotely — with counsel or the parties to discuss the transaction and specific questions of the ECA. During these meetings the ECA will provide some level of insight into their views and allow the parties the opportunity to comment directly or subsequently in writing. Where a transaction poses more substantial competition concerns, the ECA will be more engaging.

Where the ECA considers imposing remedies, they will seek input from the parties. Typically, they will allow the parties to provide proposals for remedies and negotiate remedies actively with the parties. Input from the parties will generally be considered. Also, the ECA may request information on remedies proposed or imposed by other authorities. However, there is limited precedence; we cannot identify an established practice of the ECA in respect to remedies.

The ECA can impose both behavioral and structural remedies. However, due to limited practice, no established practice regarding either behavioral or structural remedies can be identified thus far.

Whether completion can occur prior to remedies being implemented will depend on the individual remedies imposed. These may be structured to require prior implementation or structured to allow implementation post-closing.

The ECA will share their decision in writing with counsel. Typically, the ECA will send a scan of the decision ahead of the original being posted.

There is no waiting period. Clearance decisions have effect as of the date they are issued on. The date is included in the decision document.

The ECA does not explicitly address ancillary restraints. Whether these are deemed approved with the clearance decision has, to date, not been tested. Parties would be well advised to reference any relevant ancillary restraints in the filing document to make the ECA aware of these.

Currently decisions can be appealed to the competent court. With the pending amendments, an independent committee chaired by the Vice President of the State Council to review appeals against ECA decisions will be established.

Failure to notify, gun jumping, or failure to comply with remedies imposed by the ECA may be subject to a fine between 1% and 10% of the violating party’s turnover, value of its assets, or value of the transaction; whichever is highest. Neither the Competition Law, the Executive Regulations, nor the Guidelines specify whether fines will be calculated based on Egyptian or worldwide turnover or assets. The ECA has declined to clarify this issue and stated that the courts are competent to determine this matter. With the pending amendments to the Competition Law, the fines were raised to 2% to 12% of the violating party’s revenue, value of its assets, or value of the transaction; whichever is highest. The question of whether Egyptian or worldwide turnover over assets will be decisive still remains unanswered.

Alternatively, where neither the party’s turnover, asset value, nor the transaction value can be ascertained, a fine of between EGP 30 million and 500 million (approximately between USD 560,400 and USD 9.3 million) may be issued. With the pending amendments to the Competition Law, these fines will not be amended.

Additional sanctions such as suspension or revocation of licenses and closure of business permits, may be imposed by the competent courts. We expect such additional sanctions to be reversed to address severe violations or repeat offenses. Furthermore, it appears that the ECA assumes the authority to order transactions that were closed prior to clearance by the ECA to be wound up. It appears unlikely that the ECA would be able to enforce such an order in case of foreign-to-foreign transactions. In extreme cases, criminal penalties may be imposed against individuals. Finally, the competent court can impose criminal sanctions against individuals. Still, we expect such criminal sanctions to be reserved for sever violations.

Egyptian law does not distinguish between failure to notify and gun jumping. The fines for both are the same (see Question 7.1, above).

The penalties for procuring clearance based on inaccurate, misleading, or incomplete information are the same as for failure to notify or gun jumping.