Enforcement Policy of the Egyptian Competition Law: Vertical Relations

Transcription

1 Enforcement Policy of the Egyptian Competition Law 209 Enforcement Policy of the Egyptian Competition Law: Vertical Relations Mohamed ElFar * PhD Queen Mary, University of London; Associate at Matouk Bassiouny Law Firm Competition policy; Distribution agreements; Dominant position; Egypt; Enforcement; National competition authorities; Vertical agreements I. Introduction This article is intended to overview the enforcement policy of the Egyptian Competition Authority (ECA) regarding vertical agreements in general and those related to distribution in particular. This assessment comes almost nine years after enacting Law number 3 of 2005 on the Protection of Competition and the Prohibition of Monopolistic Practices (ECL) and the establishment of the ECA in August In this regard, throughout the previous decade, the ECA was able to decide on a number of cases related to vertical agreements. This includes cases related to vertical agreements prohibition (art.7 of the ECL) and others related to abuse of dominance (art.8 of the ECL). However, to date, the ECA has not published any document to clarify its enforcement policy regarding any of these articles. Therefore, this article will attempt to delve into the ECA s decisions and identify the main features of its enforcement policy. This article is intended to be beneficial to practitioners interesting in distributing their products in Egypt and/or academics interested in connecting the dots and highlighting the main themes of the enforcement policy of the ECA and paving the way for further research and debates. The first part of this article will explore the enforcement policy of the ECA in relation to vertical agreements. The second part will delve into the decisions of the ECA and relevant courts in order to identify the main themes of enforcement related to abuse of dominance and particularly those more related to distribution. The third part discusses the enforcement policy of the ECA in relation to distribution agreements in regulated markets. Finally, the fourth part will highlight some general conclusions and general themes in an attempt to highlight a viable enforcement policy of the ECA that may be drawn from the various experiences. II. Vertical agreements enforcement policy Article 7 of the ECL prohibits vertical contracts or agreements if they restrict competition. This means that proving the presence of this restriction requires the ECA to prove the foreclosure effect arising from this agreement. This needs substantial economic analysis, as it is a rule of reason prohibition. 1 In this respect, the ECA managed to invoke this article in the Ghazal case, in which a complaint was received that there was a particular studio specialising in video-recording wedding ceremonies and parties in the Governorate of Alexandria. This studio was claimed to have exclusivity contracts with most of that Governorate s five-star wedding venues to provide its services. The defendants in this case were able to foreclose any actual and potential rivals from entering the market, which, according to the ECA, constituted a vertical restraint. 2 In this case the ECA was able to prove and demonstrate the foreclosure effect arising from these exclusive agreements through gathering data from the relevant hotels, interrogating relevant persons and reviewing the actual exclusivity agreements signed between the hotels and that studio. Other than this case, this article was hardly invoked in any other cases due to the difficulties encountered to prove how an agreement or contract be able to restrict the freedom of competition. Other than this case, the ECA did not issue any other violation decisions under art.7 of the ECL. However, it is still important to scrutinise relevant ECA s non-infringement decisions which can also further clarify the methodology adopted by the ECA in its analysis. For example, in an important decision called the Water Desalination 1 case, the ECA set the standards to the assessment of Build Own and Operate agreements (BOO). In that case, the complainant signed a 20-year BOO agreement with a fixed price and quantity. The price was set to increase each year with a fixed percentage until the end of the contract. In this regard, the ECA assessed the possible foreclosure effect arising from this kind of agreements. In its appraisal the ECA stated first that, in terms of general market behaviour, it was revealed that it is normal market practice that similar desalination companies agree that no more than one desalination company supplies water to every hotel. This is because the supplier becomes fully responsible for the water quality supplied to each resort, and for health and safety reasons it is advisable to have a sole supplier. Moreover, the investment spent on the water desalination facility is quite substantial. * Former Legal Consultant to the Chairperson at the Egyptian Competition Authority and former Public Prosecutor. mohamed.elfar@matoukbassiouny.com. 1 Mohamed ElFar, The Enforcement Policy of the Egyptian Competition Law, CLI, April, 2010, pp Board Decision on September 29, 2009 (Wedding Planner case). This was a vertical restraint case where it violated art.7 of the law 3 of 2005, available at: [Accessed March 6, 2014].

2 210 European Competition Law Review Therefore, the exclusivity clause is usually set for a prolonged duration in order to recoup the investment costs and generate reasonable revenues. The ECA also referred to reasons related to economies of scale. 3 From this case it can be argued that the ECA engaged in a relatively thorough appraisal, and it has also engaged in a counterfactual assessment, the result of which was to confirm that there was not any substantial effect on competition and that the complainant had the freedom of choice, at the time of signing the agreement, to choose between various competitors (water desalination suppliers) at the time. 4 Nonetheless, even though the ECA stated that the duration of the agreement may be problematic and would need to be shortened, it is not clear from the report whether the ECA has sufficiently assessed whether the duration of the exclusivity clause is excessive when compared to the incurred investment costs. However, this decision is welcomed as it sets some standards not only for BOO agreements but also for similar contracts. First of all, it notes that the ECA closely considers comparative experiences and best practices when enforcing its rules and regulations. In addition, the ECA explored the commercial usages prevailing in this market through questioning market players, independent experts and consumers. This demonstrates the effort and precision of the technical research, together with appraising the agreement within its actual legal and economic contexts, and not in isolation. Furthermore, at the beginning of the report, the ECA stated clearly that in many circumstances vertical agreements are pro-competitive and that exceptionally they may raise competition concerns, especially when they have a foreclosure effect. Therefore, it can be understood that the above cases indicate that the ECA tends to assess vertical exclusive agreements within their actual economic and legal contexts and to benefit from comparative experiences and best practices. Furthermore, although the ECL does not expressly regulate ancillary restraints, the ECA has started developing its own criteria of their appraisal. It is important to note that according to European Union Competition Law (EU Competition Law), ancillary restraints fall outside the scope of art.101(1) of the Treaty on the Functioning of the European Union (TFEU). As the European Court of Justice (ECJ) stated in the Wouters case: Not every agreement between undertakings which restricts the freedom of action of the parties or of one of them necessarily falls within the prohibition laid down in Article [101(1) TFEU]. For the purposes of that provision to a particular case, account must first of all be taken of the overall context in which the [agreement was made] or produces its effects. 5 In this regard, the ECA in the Water Desalination 2 case (which followed and was dealing with the same resort/compound as in Water Desalination 1) decided that the distribution agreements entered into by the hotel (the management of the resort) and the villas (customers of the resort) within the compound were ancillary to the single branding agreement assessed in Water Desalination 1. In this latter case, the ECA briefly presented its finding in Water Desalination 1 and added that the distribution agreement in this case is directly and wholly related to the supply agreement in the first case. Moreover, it clearly stated that the legality or illegality of the distribution agreement in Water Desalination 2 is directly and closely dependent on the legality of the supply agreement in Water Desalination 1. Accordingly, due to the fact that the supply exclusivity agreement in Water Desalination 1 was found to be compatible with the ECL, the distribution agreement in Water Desalination 2 also has to be deemed legal. Moreover, the ECA added that had the hotel management allowed other sources of desalinated water to be used in the resort, this may potentially raise contractual liabilities on behalf of the management. Therefore, the ECA decided that this agreement is compatible with ECL where it derives compatibility from the legality of the first agreement as discussed above. 6 As for the position of ancillary restraints under the EU Competition Law, the European Commission in relation to mergers and acquisitions published a Notice on restrictions directly related and necessary to concentrations which is arguably also of relevance in the assessment of vertical agreements, 7 where it states that: For restrictions to be considered directly related to the implementation of the concentration, it is not sufficient that an agreement has been entered into at the same time or in the same context as the concentration. Agreements must be necessary to the implementation of the concentration, which means that in the absence of those agreements, the concentration could not be implemented or could only be implemented under more uncertain conditions, at substantially higher cost, over an appreciably longer period or with considerably higher difficulty(8) agreements aimed at protecting the value transferred(9), maintaining the continuity of supply after the break-up of a former economic entity(10), or enabling the start-up of a new entity(11) usually meet these criteria. 3 ECA, Water Desalination 1 Report, November, 2012, pp ECA, Water Desalination 1 Report, November, 2012, pp Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (C-309/99) [2002] E.C.R. I-1577; [2002] 4 C.M.L.R. 27 at [78]. 6 ECA, Water Desalination 2 Report, October, 2013, p.3. 7 Alison Jones and Brenda Sufrin, EU Competition Law: Text, Cases and Materials, 4th edn, (Oxford: Oxford University Press, 2011), p.231.

3 Enforcement Policy of the Egyptian Competition Law 211 In determining whether a restriction is necessary, it is appropriate not only to take account of its nature, but also to ensure that its duration, subject matter and geographical field of application do not exceed what the implementation of the concentration reasonably requires. If equally effective alternatives are available for attaining the legitimate aim pursued, the undertakings must choose the one which is objectively the least restrictive of competition. 8 From the above it is clear that the European Union sets a number of substantive criteria in order to assess the legality of whether a restriction may be deemed necessary to the implementation of the concentration, which includes a proportionality test and considering the duration. 9 Applying these criteria to the ECA s enforcement, it can be argued that these considerations were roughly taken into account by the ECA. The final report of this case is quite brief, which does not provide for a detailed assessment. Nonetheless, it is mentioned that the duration of the distribution agreement does not exceed that of the exclusivity agreement in Water Desalination 1. However, the reference is only made to the relation between the two agreements and not to the proportionality of the distribution agreement in question. This means that, to date, it seems that the ECA has a wider interpretation and consequently a lower threshold for legality in considering the validity of ancillary restraints. This is because there is not a proportionality test as in the European Union or any mention of any restrictions and/or limits to the duration beyond which it may be seen as excessive. Therefore, one can argue that whenever an agreement is deemed ancillary to another, its legality or illegality will be decided upon the assessment of the main agreement. Nonetheless, it is important to note that this precedent is not binding to the ECA, which means that in any similar case it may still reach a different conclusion or start developing its assessment criteria and narrow it down to be more in line with comparative experiences. III. Exclusive dealing of a dominant person Article 8 of the ECL highlights an exhaustive list of nine abusive practices, some of which are per se prohibitions, while others require more economic analysis. Distribution agreements entered into by dominant undertakings are regulated under art.8(c) of the ECL. This article states that a dominant undertaking is prohibited from engaging in an act that limits distribution of a specific product, on the basis of geographic areas, distribution centres, clients, seasons or periods of time among undertakings with vertical relationships. From this article it was generally believed that it prohibits any exclusive agreements entered into by dominant undertakings. In light of this understanding the ECA, in the Flat Glass 1 case, decided that the dominant producer of a specific product of flat glass in Egypt (81 per cent market share) abused its dominance. 10 It was revealed that this producer entered into exclusivity contracts that were renewed annually with six distributors. According to these contracts, the distributors were prohibited from dealing with any competing undertaking. Hence, as the ECA got copies of these contracts, it ruled that the dominant undertaking had infringed art.8(c) of the ECL. This was due to the fact that the ECA found that the distributors, according to the said distribution agreement, were limited in their distribution abilities through the imposition of a single branding condition not to handle or import competing products. 11 From this case it can be shown that the ECA for the purposes of enforcing this article undertook the following method: 1. It showed that there is a vertical relation between the producer and the distributor. 2. It identified the clause of the exclusivity. 3. It showed that this clause has been present in the distribution agreement for a prolonged period of time. From this case, it is clear that there was hardly any reference to the effect of the exclusivity clauses on the market or on competition. There was not any assessment of the foreclosure effect arising from these exclusive agreements. Yet the Board of the ECA decided that there was a violation to art.8(c) of the ECL. In a following decision in the same market in Flat Glass 2, the ECA s Board reached the same conclusion and issued another prohibition decision where it was found that there was an infringement to art.8(c) of the ECL for the same reasons identified in the above case (Flat Glass 1). Similarly, in this case there was hardly any reference to the effect of the conduct or the likely impact, harm and/or restriction to competition. 12 However, ECA s practice in the Steel case revealed that, although the initial report (and internal unpublished study) proved the existence of an exclusivity agreement entered into by the dominant undertaking and that it was deemed illegal due to the per se nature of the prohibition, the ECA s Board altered the threshold and considered potential harm to the market and required its analysis. Hence, the initial report was amended and the ECA was unable to prove any anti-competitive effect arising from 8 Commission Notice on restrictions directly related and necessary to concentrations, paras 12 13, (2005/C 56/03) available at: [Accessed March 6, 2014]. 9 See generally, Richard Whish, Competition Law, 6th edn, (Oxford: Oxford University Press, 2009), pp Press Release, ECA, Complaint by Hewalah Misr Company for Glass Products against Egyptian Glass Company and a group of traders representing sole distributors of the Egyptian Glass Company s products, available at: [Accessed March 6, 2014]. 11 Article 8(c) of Law Number 3 of ECA, Flat Glass 2 Report, 2012.

4 212 European Competition Law Review the exclusivity conduct. As a result, the ECA s Board concluded that the dominant undertaking was found not to be infringing the ECL due to lack of effect on the market. 13 This decision created immense ambiguity to the enforcement policy of the ECL. 14 This is because it could have meant that even though an article in the ECL may initially be interpreted as a per se prohibition, the Board of the ECA can still have the authority to alter this approach and use an effects-based methodology. Nevertheless, this decision highlighted an inconsistency in the enforcement policy of the ECL. This is because the ECA in certain cases applied art.8(c) of the ECL as a per se prohibition, while in other cases it applied a rule of reason threshold when applying the same exact article (art.8(c) of the ECL). However, after the events of 2011 and the toppling of the ruling regime at the time, the Prosecutor s Office received a complaint stating that the ECA s decision was biased in favour of a main political figure from that ousted regime, who was also the chairman of this dominant undertaking. Therefore, the Prosecution started an investigation in the case. 15 As a result, and after interrogating various concerned parties (including two senior case handlers at the ECA who confirmed the existence of a violation according to the per se understanding of art.8(c) of the ECL), it started prosecuting the case before the Economic Criminal High Court where it finally reached the Economic Criminal Court of Appeal (the Court) which delivered a landmark decision. 16 The Court in its decision highlighted and stressed the following. 17 First of all, it ruled that art.8(c) is a per se prohibition which means that it does not require any harm assessment or consideration to the effect of competition. It said that the harm should be presumed. Moreover, it overturned the decision of the Board of the ECA where it said that the ECA s Board has erred in applying the ECL by requiring the inspecting team to consider the effect and that the conclusion of the inspecting team was initially correct when it found an infringement based on the per se interpretation of art.8(c). In addition, the Court stated that the prohibited exclusivity may be direct through an explicit single branding and/or exclusive supply clause, and that it may also be through indirect means such as the exclusivity identified in the Steel Distribution case. In this case, the dominant firm adopted a quota system where distributors were obliged to buy their designated quotas in full. If any distributor failed to buy its quota in full for two consecutive months, it would have been punished by lessening its quota to the amount the distributor had actually withdrawn. Hence, in the low seasons distributors were forced to buy their entire quotas despite the low demand. As a result, a number of distributors were distributing exclusively to the dominant undertaking out of fear of losing their quota which they see as essential for them to compete in the high season. In this case, the Court found that the dominant undertaking has abused its dominant position by imposing an indirect form of exclusivity (marketing strategy which has a loyalty inducing effect). Hence, it had to pay a fine of 100 million Egyptian Pounds (approximately US $14.5 million). In this case, the Court stressed, among other things, that direct and indirect exclusivity agreements are prohibited per se. It is important to note that the ECA in its report proved that absolute exclusivity (100 per cent exclusivity) has occurred in around 22 per cent of the sample. This percentage represents around 8 per cent of the distribution market. This percentage was enough for the Court to rule that indirect exclusivity has occurred and that the dominant undertaking has a special responsibility not to engage in acts which would have this outcome. 18 Although this decision significantly clarifies the interpretation of art.8(c) of the ECL and supports putting an end to ambiguities regarding the actual interpretation of the prohibition mentioned, it sets a very low threshold for incrimination. The position delivered in the Court s ruling is to a great extent in conformity with the position of the EU Competition Law. The ECJ in the Tomra case ruled that: the foreclosure by a dominant undertaking of a substantial part of the market cannot be justified by showing that the contestable part of the market is still sufficient to accommodate a limited number of competitors. First, the customers on the foreclosed part of the market should have the opportunity to benefit from whatever degree of competition is possible on the market and competitors should be able to compete on the merits for the entire market and not just for a part of it. Second, it is not the role of the dominant undertaking to dictate how many viable competitors will be allowed to compete for the remaining contestable portion of demand. 19 Furthermore, the ECJ added that: 13 ECA, Steel Bars Report, 2009, pp ElFar, The Enforcement Policy of the Egyptian Competition Law (2010) April CLI Interview by Hemmat Salama and Samah Labib with Samir Al-Sayad, Minister of Trade and Industry, Samir Al-Sayad fi Hewaroh ma a Al-Youm Al-Sabe : Ta akadt min Nazahit Tarakhees Al-Hadeed Al-Araba ah, (The Minister said that he made sure that the Four Steel Licenses were granted lawfully), Al-Youm Al-Sab (Egypt), May 9, 2011, available at: [Accessed March 6, 2014]. 16 Economic Courts were established by the Law number of These courts have civil and criminal circuits which are entrusted to review all the cases related to 17 laws which are of an economic nature including, but not limited to, Competition Law, Consumer Protection Law and Capital Market Law. 17 Decision of the Economic Criminal Court of Appeal in the Case number 268 of 2013 Misdemeanours Appealed and number 35 of 2013 Economic Misdemeanours delivered on November 6, Decision of the Economic Criminal Court of Appeal in the Case number 268 of 2013 Misdemeanours Appealed and number 35 of 2013 Economic Misdemeanours delivered on November 6, 2013 at Tomra Systems ASA v European Commission (C-549/10) [2012] 4 C.M.L.R. 27 at [42].

5 Enforcement Policy of the Egyptian Competition Law 213 the determination of a precise threshold of foreclosure of the market was not essential, that the General Court did not fail to comply with its obligation to state reasons in rejecting Tomra s abovementioned arguments. 20 From the above, it is clear that the position of exclusivity in Egypt is very similar to that of EU Competition Law, where they both do not have a clear requirement or prerequisite of a threshold of foreclosure before the court may rule on the illegality of an exclusivity obligation. This creates a burden on the market players who would be required to be quite aware and cautious before entering into terms of agreements which may amount to exclusivity or have a loyalty-inducing effect. IV. Exclusive dealing in regulated markets According to art.9 of the ECL, public utilities managed by the state are excluded from the scope of the ECL. Moreover, undertakings managing a utility and governed by a private law may be exempted from the ECL under certain conditions. Henceforth, if there is not an exemption, the latter form of undertakings will fall within the scope of the ECL. For example, in the market of natural gas, 21 Egyptian law states that the government is responsible for and supervises all the stages of extraction, manufacturing and distribution. 22 Moreover, prices are set by governmental decrees. 23 However, after years of developments, distribution is currently entrusted to seven mainly private companies which cover most governorates in Egypt. Each distribution company has territorial exclusivity in a certain geographical area (one or more governorates). In this regard, the ECA received a complaint that a natural gas distribution company (NatGas Company and/or defendant) had been discriminating in its contractual terms between the complainant and its rivals. After exploring this market thoroughly, the ECA reached the conclusion that it is a regulated market where distribution is done through adhesion contracts in the form of templates provided by the Natural Gas Authority. However, distribution agreements of companies with low or average consumption of natural gas are prepared by the distribution company itself and are only certified by the Natural Gas Authority. In this respect, the ECA reached the conclusion that NatGas Company is a dominant undertaking as it holds an exclusive licence for distribution in this geographic area from the government granting it a market share of 100 per cent of the relevant market. Moreover, it added that the concerned distribution agreements are just templates which were approved by the Natural Gas Authority and do not vary in their content. Hence, there was no discrimination in the contractual terms between the complainant and its rivals. From this case, it is clear that the ECA recognises the concept of legal monopolies and that it is a method by which an undertaking may have significant market power (i.e. a dominant position). Henceforth, the agreement granting the defendant (NatGas Company) exclusivity over the distribution of natural gas over a certain geographical area was deemed to be legal as it falls outside the scope of the ECL. Moreover, the ECA did not dismiss the market as a whole just because it is heavily regulated by the government. On the contrary, the ECA delved into the details of that market until it reached a conclusion that on a certain level of the market, ECL rules should be applied in full force. Hence, after its assessment of certain conducts, including allegations of tying unrelated contractual terms to the main distribution agreement, it concluded that there was not a violation of the ECL. Nevertheless, although the ECA reached a similar conclusion in the electricity distribution market, (which is that that licences granted to distribution companies also have territorial exclusivity such that consumers would not be entitled to obtain electricity from any other distributor) unlike the natural gas case, it ruled that the other practices fall outside the scope of the ECL, not that there is not a violation. In this case, there were complaints about the exclusive nature of the electricity agreement, imposing a security deposit and tying a certain kind of electrometers on consumers in order to supply electricity. In its case report, the ECA concluded that these two latter conditions (deposit and tying) fall outside the scope of ECL and fall within the scope of the Electricity and Consumer Protection Authority (Electricity Authority). Moreover, the report adds that the Electricity Authority rescinded the obligation to pay the deposit on the consumers. 24 From the above two examples, it is clear that there is a material difference which is that in the natural gas case, the conclusion was that certain practices, including tying, fell outside the scope of the ECL because they are regulated by specific laws and regulations. However, the allegation of discrimination between customers was proved not to exist. However, in the electricity distribution case, similar practices (e.g. tying) were deemed to fall outside the scope of the ECL because it falls within the scope of another regulatory authority (the Electricity Authority). 20 Tomra [2012] 4 C.M.L.R. 27 at [48]. 21 ECA, Natural Gas Distribution Report, 2013 available at: [Accessed March 6, 2014]. 22 Article 1 of the Natural Gas Law 217 number of 1980 stipulates that the General Authority of Petroleum will be responsible for all the stages of extraction, marketing and distribution of natural gas. 23 Prime Ministerial Decree number 1953 of ECA, Electricity Distribution in Madinaty Compound Report, 2012, p.2, available at: %20Electricity%20Sector.pdf [Accessed March 6, 2014].

6 214 European Competition Law Review On one hand, the ECA s enforcement policy indicates that it will only refrain from monitoring a market when there are clear laws and regulations governing the said market or a clear law excluding the application of the ECL. In addition, it is also evident from the natural gas decision that the ECA is ready to apply the ECL on any level or part of a market which is not regulated. On the other hand, the ECA s policy in another case signals that even though the electricity market is heavily regulated, another reason for not falling within the scope of the ECL is that the conducts (the tying of the deposit and the electrometer conditions) do not fall within the prohibited conducts under the ECL. Another reason for not falling within the scope of the ECL is that they fall within the scope of another regulatory authority (i.e. Electricity Authority). 25 However, within the electricity distribution report itself it is plainly stated that the reason for the deposit not to fall within the scope of the ECL is that it does not fall within the exhaustive list of prohibitions in art.8 of the ECL. In this regard, the ECA in the Flat Glass cases decided that according to art.8(d), contractual terms which have no relation to the relevant product may constitute tying which is prohibited under that article. 26 Article 8(d) stipulates [imposing] as a condition, for the conclusion of a sale or purchase contract or agreement of a product, the acceptance of obligations or products unrelated by their very nature or by commercial custom to the original transaction or agreement. Therefore, and on the same lines, the ECA may have possibly been able to have argued that this contractual obligation of paying a deposit is also a tied term which has no relation to the actual usage of electricity. As for the electrometer condition, it is stated that the electrometer as a product is an essential component for the electricity distribution. In addition, the ECA argued that the electricity distributor owns that electrometer. This may also seem to be an assessment of art.8(d) of the ECL. This is because the ECA stated that the electrometer is, by its very nature, technical; and commercial usage is related to the distribution of electricity, in what seems to be an obvious application of that article. Therefore, although the final non-infringement conclusion seems quite plausible and justifiable (regarding the electrometer), the claim that it does not fall within the scope of the ECL remains confusing. First of all, as shown above, the conducts may have possibly fallen within the scope of the ECL, as was the situation under the natural gas case. Therefore, although the final conclusion may seem the same, the methodology of reaching them is quite different. Where the ECA argues that it has competence in one but there is no infringement, in the latter the ECA argues that it does not have competence to review the case. Secondly, the other reason mentioned in the electricity distribution report on why the conduct does not fall within the scope of the ECL is that it falls within the scope of another sector regulator. This reason also creates significant ambiguities. This is because the ECA in the natural gas case argued that it has competence and made an assessment of a number of conducts accordingly although there is a sector regulator, as previously shown. Moreover, in the Mobile Operators cartel case, the ECA argued that it has competence to review the case even though the National Telecommunication Regulatory Authority has also a clear jurisdiction on the matter. Therefore, it becomes unclear why the ECA made such an argument when there are a number of its decisions where it argues otherwise. Furthermore, the ECA has intervened in the pharmaceutical market although it is a highly regulated one. In this market, there are several governmental bodies which monitor and license the pricing, imports and distribution of pharmaceuticals. Nonetheless, the case was not dismissed for being a regulated market where the ECA delved into a thorough analysis accordingly. More importantly for the purposes of the present discussion, even though the ECA did not find a violation in the said market, it also concluded that the complaint fell within its competence and therefore it undertook the inspection. 27 It may finally be concluded that, notwithstanding a number of ambiguities, the general enforcement policy of the ECA in regulated markets is that it will delve into a thorough analysis in any market where it does not find a clear regulation and/or law which unambiguously excludes its enforcement. The presence of a sector regulator which may have a number of competition law powers does not preclude the competence of the ECA. Practice proved that the ECA is willing to expand its jurisdiction and tailor its way to enforce the ECL in various sectors of the Egyptian economy. V. Conclusion In this article the enforcement policy of the ECA was explored in three different fields related to exclusive dealing agreements. First of all, it can be argued that the ECA will be less likely to find a vertical agreement to infringe the ECL unless one of those engaged in that vertical agreement has some sort of market power. This is evident from the infringement and non-infringement decisions delivered by the ECA as presented earlier. In addition, the ECA tends to develop its enforcement policy in new sectors such as carrying a competitive assessment of the BOO and defining its enforcement methodology of ancillary agreements. This policy is of significant 25 ECA, Annual Report, , pp ECA, Flat Glass 1 Report, 2012, p.22, available at: [Accessed March 6, 2014]. 27 ECA, Annual Report, , p.16.

7 Enforcement Policy of the Egyptian Competition Law 215 importance, as the Egyptian government and other investors are engaging in several enormous infrastructure projects which require this kind of contract (e.g. the expansion and development project of the Suez Canal). Hence, clarifying the enforcement policy of the ECL will contribute in clarifying how the ECA intends to assess these agreements. In addition, this article explored the enforcement policy of the ECA when it comes to exclusive dealing arrangements entered into by dominant undertakings. It is evident that the ECL has a strict approach in relation to exclusive dealings arrangements. This is because it prohibits per se direct and indirect forms of exclusivity. It remains questionable how the ECA will deal with rebates which have a loyalty-inducing effect and which is a practice undertaken by numerous national and multinational potentially dominant undertakings distributing their products in Egypt. Finally, as for the enforcement policy of the ECA in regulated market, as shown above, the mainstream cases of the ECA, apart from a number of enforcement irregularities, is welcomed. Undertakings enjoying legal monopolies and/or in price regulated markets are still prohibited from engaging in the conducts mentioned in art.8 of the ECL so long as there is not a clear regulation or law precluding the ECL s enforcement.