Egyptian court upholds Mobinil antitrust fine in landmark ruling

Deya Abaza, Sunday 1 Jun 2014

Ruling upholds previous decision to charge mobile operator LE100,000 for failing to cooperate with antitrust watchdog

Mona el garf
Mona El-Garf (Photo: Al-Ahram)

An Egyptian court ruled on Sunday to fine the Egyptian Company for Mobile Services (Mobinil) for lack of cooperation with Egypt’s antitrust watchdog, the Egyptian Competition Authority (ECA).

The decision upholds a previous ruling issued last May, the first of its kind, which imposed a fine of LE100,000 ($10.3) on the mobile operator on charges of failing to provide the ECA with information it requested, judicial sources told Ahram Online.

The telecom provider can still appeal the verdict in a court of cassation. 

"Mobinil is currently studying all its legal options to continue to defend its rights," a company representative told Ahram Online in response to the ruling.

The latest ruling is a victory for Egypt’s competition authority, affirming its jurisdiction over the telecommunications sector against an appeal by the company, which had claimed that the right belonged solely to the National Telecommunications Regulatory Agency (NTRA).

The court ruled that the authority of the ECA, created in 2005, overrides that of the telecoms regulator in matters of antitrust, according to a statement released by the ECA on Sunday.

"This verdict crowns the efforts of the authority in affirming its inherent right to monitor all monopolistic practices in various economic sectors according to the competition law," said ECA chairwoman Mona El-Garf in the statement.

Egypt's three mobile operators – Mobinil, Vodafone Egypt and Etisalat Misr – were referred to court last December on accusations by the ECA of forming a cartel.

The charges are based on a March 2012 decision by the companies to simultaneously charge customers an additional LE0.5 per month in order to pass on the burden of a stamp tax hitherto borne by the companies.

Sunday's fine is the highest applicable for failing to cooperate while under investigation by the ECA, according to Egypt's antitrust law at the time the case was taken to court.

The fine for the offense was increased to range from LE20,000 to LE500,000 through amendments approved late last month by Egypt's cabinet.

The amendments also changed the penalty for violators of the competition law to a proportional fine ranging from 1 to 12 percent of revenues from monopolistic practices, with a fixed fine ranging from LE500,000 to LE5 million if the court is unable to determine the revenues.

"This amendment is a positive step because we do not want to ruin companies, just penalise them for unfair practices," former ECA chair Mona Yassine told Ahram Online.

Most important, according to Yassine, is the new law's provision granting the ECA the right to take direct legal action against suspected violators of the competition law, a prerogative which previously belonged to the minister of international trade and industry.

"There was a case in the past, before the [2011] revolution, when the minister refused to take a case in which we had referred him to court," said Yassine.

In 2007, then-minister of international trade and industry Rashid Mohamed Rashid had refused to refer Egyptian food and beverage companies to court for fixing the prices at which they bought dairy products from growers, at the request of the country's ministry of agriculture, a former high-ranking government official familiar with the matter explained to Ahram Online.

The new law includes a provision which waves charges of monopolistic practices in cases where such charges conflict with national interest, according to Hisham Ragab, legislative councillor to the minister of international trade and industry.

The amendments also reduce the number of government officials on ECA's board of directors from four to two members, "a step which, with the power to initiate legal action, gives the independence required for effectiveness," said Yassine.

Other amendments give the ECA the right to issue its opinion on any government decision, decree or law which would have an impact on competition.

"Although non-binding, this creates pressures from public opinion," explained Yassine, greeting the amendment.

The language of the law also clarifies the definition of antitrust as covering all kinds of contracts, including "buying and selling, leasing, distribution and so on," said Ragab.

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