Egyptian Competition Authority Investigates Telecommunications Company

On 9 March 2024, the Egyptian Competition Authority (ECA) announced that it found that an Egyptian telecommunications company abused their dominant position to impose tying and bundling measures. The company compelled customers to subscribe to fixed line internet services in order to receive landline phone services. This tying of different services was found to violate the Egyptian Competition Law because the telecommunications company has a dominant position in Egypt.

After receiving complaints from citizens in different governorates throughout Egypt, the ECA launched an investigation into alleged anticompetitive practices within the telecommunications sector. The ECA's investigation revealed that a particular telecommunications company was abusing its dominant position in the market. Specifically, the company's sales representatives at various outlets were found to be engaging in coercive practices by refusing to provide customers with landline phone services unless they also agreed to subscribe to fixed line internet services. In cases where customers resisted the bundled offering, the company resorted to delaying the provision of services as a tactic to pressure customers into accepting both services. 

The ECA determined that such abuse of a dominant position constituted a violation of the Egyptian Competition Law. The ECA determined that through this violation, the telecommunication company in question deprives citizens of the right to choose between companies providing fixed line internet services in the Egyptian market and obtaining what suits their preferences in terms of quality and price. Furthermore, the ECA found that the violation unduly deprived competitors of opportunities to attract potential customers, which accordingly would undermine competition in the telecommunication sector.

In response to the violation discovered, the ECA instructed the telecommunication company to immediately (1) cease any practices that would make procuring landline telephone services conditional on accepting other services, such as fixed line internet service, and (2) issue immediate instructions to all of their employees not to engage in such practices.

The investigation of antitrust violations in the telecommunications sector has prompted the ECA and the National Telecom Regulatory Authority to collaborate on issuing guidelines for organizing telecommunication services. These guidelines aim to maintain competitive market conditions that offer customers the freedom to select telecommunications providers and switch between them without facing barriers. The goal is to prevent any coercion for customers to engage with a particular provider or to obtain unrelated products. This step reflects a wider commitment of the ECA to increase competition law compliance and enhance capabilities of sector specific regulators to prevent and address violations.

Companies active in Egypt should take note of the ECA's decisions and the ECA's heightened scrutiny of competition compliance, especially in sectors impacting consumers. The ECA—in concert with other Egyptian authorities and governmental entities—has over the past year directed its focus particularly on consumer facing businesses to ease pressures on consumer prices. Consequently, consumer facing business should expect elevated scrutiny of their practices. This may also become relevant in respect to merger control once the pre-closing notification regime is enforced starting 1 June 2024.