23 April 2024

ECA Announces Action Against Cartel In

Bremer FZ-LLC


BREMER is a regional law firm with offices throughout the Near and Middle East and North Africa. Our team comprises of dedicated professionals qualified in Europe and the MENA-region. We advise on antitrust & merger control, corporate M&A and joint ventures, ECA backed project and export finance.
On 2 February 2024, the Egyptian Competition Authority (ECA) announced that they discovered price fixing among 20 manufacturers of ice blocks for commercial use.
United Arab Emirates Antitrust/Competition Law
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On 2 February 2024, the Egyptian Competition Authority (ECA) announced that they discovered price fixing among 20 manufacturers of ice blocks for commercial use. This collusion primarily affected commercial customers. Still, the ECA particularly highlighted the indirect implications of the violations for consumers, putting the case in the context of the ECA's wider focus on competition law violations with effects on consumer prices.

The ECA found that the 20 manufacturers engaged in three separate horizontal agreements aimed at collectively raising and fixing prices for commercial use ice blocks across the Egyptian capital and the greater Cairo metropolitan area. In the view of the ECA these arrangements constituted price fixing and thus violations of article (6)(a) Egyptian Competition Law (Law 3/2005).

In their announcement the ECA stressed the significance of commercial ice blocks for various sectors. They specifically highlighted that pursuant to the Egyptian Building Code for the Design and Construction of Concrete Structures, concrete must be stored at 25 degrees Celsius. During summertime, concrete manufacturers heavily rely on ice blocks to maintain the required storing temperature. Commercial ice blocks are also used in cooling of food stuffs and other essential commodities. With the onset of March, Egypt is already feeling the heat of summer. Furthermore, the Islamic month of Ramadan was imminent when the ECA issued their decision. The authority noted that Ramadan sees increased food consumption during traditional feasts as well as charitable food distribution. This further increases the demand for ice blocks.

While the actions of the ice block manufacturers primarily affected businesses, the ECA again highlighted the (indirect) impact on consumer. Whenever competitors collude to increase and fix prices, they do not only cause prices to rise. They also diminish incentives to innovate, causing quality of products and services to stagnate or fall.

Considering the violation as well as the impact their actions had on completion and consumer prices, the ECA decided to initiate legal action. Aside from imposing fines the ECA explicitly reminded the ice block manufacturers of their obligation to individually price their products and refrain from exchanging information on pricing, quantities, and costs.

In a side note, the ECA referenced the leniency procedure provided for in article (26) Competition Law. Under the leniency procedure, the first violator reporting a cartel they are involved in may avoid administrative and criminal sanctions (for an overview of the Egyptian leniency program see ourclient brief from 10 February 2023). It appears that the ECA felt it necessary to raise awareness of the Egyptian leniency program to support their investigations.

Over the past year, the ECA has been increasingly concentrating their investigative efforts on competition law violations affecting consumers, such as several violations in the education sector (see for example our client briefs from29 January 2024,3 January 2024, and20 October 2023). While primarily affecting business customers, the recent action against ice block manufacturers appears to be in line with this trend. In particular, the ECA's emphasis on (indirect) effects on consumer and the reference to Ramadan as exacerbating such impacts draws a line to prior decisions of the ECA focusing on competition law violations affecting consumer prices. Companies engaged in consumer facing businesses or businesses that could have a reasonably imminent effect on consumer prices should pay increase attention to their operations in or with relevance to Egypt.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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