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DealMakers AFRICA Q2 2020
Egypt: Simplified cartel leniency procedures
Marker system and an anonymous preliminary discussion mechanism for potential applicants introduced
by Mohamed Elfar and Hania Negm
In July 2020, the Egyptian Competition Authority (ECA) issued guidelines regarding the scope of, and procedures relating to, the leniency regime as stated in Article (26) of the Egyptian Competition Law (ECL).
Since the adoption of the leniency regime in 2014, a number of leniency applications have been submitted to the ECA. However, new guidelines build upon previous experiences and attempt to expand and facilitate the process by introducing new elements, such as informal discussions with the regulator and a marker system, in an attempt to increase transparency and the efficiency of the regime.
Companies are now entitled to apply for a marker for leniency in Egypt.
The leniency regime is now more transparent and grants more protections to the leniency applicants.
Principals whose agents are involved in a cartel can now both benefit from leniency.
Companies need to ensure that they operate within the permitted parameters of the ECL. With the number of leniency applications already on the rise, these latest guidelines may encourage more companies to come forward and apply for leniency.
What is the development about?
The existing leniency regime is only applicable to horizontal agreements. Previously, the main features of the regime were stated in the ECL and the accompanying executive regulations. However, the regime remained underutilised, as a result of a number of practical difficulties and ambiguities facing enforcement.
These new guidelines highlight the detailed requirements of a successful leniency application, and introduce a marker system along with a process to informally discuss any potential application (on a no names and no relevant market basis).
It has also settled the previous discourse and confirmed that it is possible to obtain corporate leniency along with individual leniency. Regarding corporate leniency, the definition has been expanded to include current and previous board members, employees and, more importantly, independent agents.
What does it mean?
Whenever an individual or company is involved in a cartel, it needs to promptly assess its risks and consider whether it would be in their best interest to report the incident to the ECA.
Main benefits of the leniency regime to companies:
Total individual and/or company immunity from criminal liability.
Protection of the reputation of the applicant, as the applicant will be treated as a witness rather than a defendant and, consequently, its name will not be recorded as a defendant in the published court decision.
Does not risk losing its imports license.
Does not risk facing other sanctions under the Public Tenders laws and regulations.
As stated in the ECL, there are requirements for a successful leniency application, including:
The company must submit a leniency application before any decision by the Board Members of the ECA issue a decision in relation to a cartel.
The applicant must submit sufficient evidence to prove the crime.
The applicant must cease its participation in the cartel, unless the ECA, in order to ensure confidentiality/prevent tipping off, permits the applicant to continue to engage in the cartel.
The applicant must submit a detailed legal memorandum, including detailed information about the cartel.
As noted, individuals and companies are entitled to submit leniency applications. This means that an employee within a company can decide to expose information to the ECA. In this case, leniency will only be granted to the employee and will not be extended to the whole company.
The ECA has also introduced a marker system whereby, if a company/individual has incomplete information about the cartel, it may still apply for a marker to reserve first place as a potential leniency applicant. However, the person will need to complete the said application within 30 days from the date of the marker.
Finally, the ECA has established an informal discussion mechanism. Under this system, parties or their representatives can explore, with the ECA, the possibility of submitting a leniency application while maintaining the anonymity of the potential applicant and the relevant market concerned. This could be very useful to potential applicants as they would be able assess their legal position without the risk of exposure to the ECA. This mechanism will also allow potential applicants to get further clarity on any pending questions they may have regarding their specific case.
The ECA has also confirmed that it is strictly committed to confidentiality, as mandated under the ECL.
ElFar is Counsel, and Negm an Associate at Helmy, Hamza & Partners (Member Firm of Baker & McKenzie International) in Egypt.