REPORT ON THE SEMINAR Competition

1 And Policy in EgyptREPORT ON THE SEMINARD ecember 3, 2006 TRACTRADE-RELATEDASSISTANCE CENTERThe Trade-Related Assistance Center (TRAC) was established by the AmericanChamber of Commerce in Egypt (AmCham) in October 2005 to serve as atrade resource for both local and international businesses on issues related toEgypt s bilateral and multilateral trade agreements, as well as its agreements with theWorld Trade Organization (WTO). Through its four components, the USAID-backedTRAC project works to: Establish a working channel between the private sector and the governmentand convey private sector standpoints and concerns to policymakers to betaken into consideration at the negotiating table (Ad Hoc and Awarenesscomponent). Establish a user-friendly document repository, which provides the businesscommunity access to reliable trade information (Help Desk component). Help enhance Egypt s competitiveness, through institutional and tradecapacity building and upgrading human resources in relation to the keyareas of foreign trade (Training component).

2 Maintain a web portal that provides information on trade agreements, traderegulations and the impact of these agreements on various sectors of theeconomy (IT component). ABOUT TRAC iiiiiDirector s Letter1 Introduction2 OPENING SESSION3 Question & Answer Session 5 SESSION ONE: Objectives, Scope and Application of Competition Law and Policy in Egypt The Scope and Application of the egyptian Competition Law The Impact of Implementation of the Competition Law on Economic Performance Observations on the egyptian Competition Law Compared with Competition Regimes in Other Countries 12 Question & Answer Session 15 SESSION TWO:International and Regional Cooperation on Competition Interrelationship between Trade, Investment and Competition Policy at the International, Regional and National Levels Effective Cooperation in the Area of Competition Policy at the International and Regional Levels20 The Competitive Environment in the Beverage Industry in Egypt.

3 The Coca-Cola Perspective Building Bridges for Development of Cooperation Between Competition Authorities 27 Question & Answer Session 31 SESSION THREE: The Impact of Privatization and Reform on Competition in the Telecom Competition in the Telecom Sector 33 What can Competition Authorities Learn from the Telecom Sector and Vice Versa 35 Question & Answer Session 41 Recommendations 42 Annex 1: List of Speakers 43 Photo Session 44 TABLE OF CONTENTSCOMPETITION LAW& POLICY IN EGYPT1 With the aim of promoting a Competition culture and tackling anti-competitivebehavior, Egypt ratified a Competition law in February 2005. The Trade-Related Assistance Center (TRAC) of the American Chamber of Commercein Egypt dedicated its 2006 annual conference to the topic of Competition Law and Pol-icy in Egypt.

4 Having held a brainstorming session a few months earlier with the egyptian Compe-tition Authority (ECA) on Abuse of Dominance and Competition (TRAC REPORT ,September 2006), TRAC felt bound to take the issue a step further. The conferenceencouraged a free and open discussion between the egyptian business community, theECA, academics, NGOs and consumers on this highly sensitive and critical issue in aneffort to utilize the law to its fullest point made clear throughout the conference was that the Competition law couldnot thrive on its own, but rather required a more conducive liberalized environment toflourish. It was felt that a supportive culture of Competition still had a long way to gobefore making the private sector and consumers cognizant of the benefits of enforcingcompetition law in Egypt. It was important to stress that the government is not are the days when public sector companies were at liberty to abuse their position inthe egyptian market with monopolistic practices.

5 Private and public sector companies areheld equally accountable under the Competition law. The sole objective of ECA, which isresponsible for applying the law, is to safeguard against any abusive practices and to allowfair and productive Competition to prevail in the market for consumers welfare. A well-enforced Competition law will attract more foreign direct investment to Egyptwithout necessarily crowding out existing competitive players notably among the smalland medium enterprises, which need to preserve their niche in the domestic , it was made clear that the Competition law was not carved in stone and as the econ-omy is continuously reforming itself into a market economy, the law should be allowed toevolve and be refined in accordance with the developments of the egyptian market andthe requirements of its private sector ,Magda ShahinDirector, Trade-Related Assistance Center (TRAC)DIRECTOR S LETTERINTRODUCTION2In recognition of the growing importance of preserving a healthy, competitive businessenvironment to sustain trade liberalization reform in Egypt, the Trade-Related Assis-tance Center (TRAC) of the American Chamber of Commerce in Egypt (AmCham)

6 Dedicated its annual conference to Competition Law and Policy. The conference tookplace on December 3, 2006 at the Semiramis InterContinental Hotel, and was organizedin cooperation with the egyptian Competition Authority (ECA) and the Commercial LawDevelopment Program of the US Department of Commerce. The conference broughttogether numerous international experts and practitioners in the field of Competition pol-icy, and attracted some 400 attendees from the private sector, government and conference addressed the private sector, the relevant segments of the public sec-tor and regulatory bodies with the purpose of raising awareness of both the opportunitiescompetition law offers and the restrictions it imposes. In general, it sought to drive homethe notion that the issue of Competition law is a complex and dynamic one, constantlyevolving in tandem with the evolution of the market. In this spirit, it was stressed thatwhile international and regional trade cooperation and building on the experiences of oth-ers will facilitate an increasingly robust Competition authority, Competition law must beenforced in a manner relevant to domestic conditions.

7 Conversely, as vital as the enforce-ment of the law is, priority must simultaneously be given to spreading a competitionculture in general, and to raising the awareness of the private sector in particular, in orderto generate higher levels of voluntary , it was also noted that another reason why raising awareness has become soimportant was that Competition law and policy are being increasingly incorporated inbilateral and regional trade agreements, including US free trade agreements and Europeanpartnership agreements. The private sector, in particular, needs to be well informed andregularly updated on the substance of these LAW& POLICY IN EGYPT3 OPENING SESSIONA fter welcoming participants, keynote speaker and AmCham President TaherHelmy commented on the long road to appreciating how crucial Competition isto private sector development in Egypt. Competition law was on the agenda ofthe People s Assembly for ten years before it was finally ratified in 2005.

8 It is now widelyacknowledged that Competition policy, which aims to enhance free trade, forms an essen-tial and integral component of the economic reform process. Competition policy and law,according to Helmy, intends to ensure that the disintegration of government monopoliesthrough privatization does not result in private sector monopolies. Additionally, the Competition law in Egypt has development goals of raising the gen-eral standards of living and promoting the interests of consumers. According to the WorldBank, Competition policy has four main objectives:1. The maintenance and protection of effective competition2. Eliminating restraints on competition3. Promoting the freedom of trade and market access 4. Protecting the welfare of the consumer Helmy also noted that effective Competition authorities form the cornerstone of anymarket economy. These are the bodies charged with enforcing Competition law with aview to maintaining a healthy and fair business environment while enabling small andmedium-size enterprises to thrive.

9 On this note, he introduced the next speaker, MonaYassine, chairwoman of the egyptian Competition Authority (ECA). Egypt s Competition law, the Law of Protection of Competition and Prohibition ofMonopolistic Practices, was ratified in February 2005, the executive regulations for thislaw were issued in August 2005, and the executive director of the ECA was appointed inJanuary 2006. The ECA serves as a government advisory body focusing primarily onissues related to the privatization process and how companies stand with respect to thecompetition law. The agency received its first complaint in April of the same year, whichcan be regarded as its operational commencement date. Since then, the ECA has receivedseven complaints, four of which have been better acquaint her audience with the ECA s work, Yassine offered a quick sum-mary of the nature of the complaints it has handled to date.

10 These included complaintsagainst companies accused of exploiting their dominant positions in the market: onethrough price discrimination, another by selling below market prices, and a third com-plaint against an alleged cartel. The ECA received two more notifications from theMinister of Trade and Industry requesting investigations into price hikes by the cementand steel industry. These investigations are currently in progress. Another important task of the ECA is to raise public awareness of its mission. To date,the authority has organized 25 seminars and workshops intended to better acquaint theprivate sector, the media and consumers with Competition law and the ECA s the 15 members on the ECA board of directors, the overwhelming majority arefrom the private sector, with four government representatives. The ECA has engaged ayoung staff with diverse skills and a group of highly qualified administrators, lawyers,market analysts and economists.