Legal Affairs Committee
The consumer protection law
AmCham’s Industry and Legal Affairs committees held a joint meeting on July 3 at the Four Seasons Nile Plaza Hotel to discuss the pros and cons of the new consumer protection law, which was recently adopted by the People’s Assembly. Guest speakers Saeed Al Alfy, former chairman of the People’s Assembly Economics Committee, Zeinab Awadallah, consumer protection adviser to the minister of trade and industry, and Hassan Gemei, head the of the Department of Civil Law at Cairo University’s Faculty of Law, shared their opinions on the new law.
Al Alfy expressed his support for the consumer protection law, arguing that it will protect not only the consumer, but also the producer and businesspeople. He pointed out that the board of directors of the Consumer Protection Authority will be comprised mostly of NGOs and other civil society representatives whose presence will ensure that average Egyptians have a voice.
He said the media attention that will surround the authority, coupled with its desire to prove its effectiveness when it comes to protecting the rights of the Egyptian consumer, should help raise the public’s awareness of their rights under the law as well as the duties of business owners. He pointed out that the law will mean that the “no return, no exchange of items sold” sign will disappear, which is in favor of the consumer.
Awadallah then took the floor to comment on the advantages and disadvantages of the law. She noted a conflict of interest in the law’s monitoring by a government body, explaining that it will create a difficult situation if at some point the interests of that government body go contrary to those of the consumer.
Gemei, meanwhile, noted that the law stipulates that all product data must be written in Arabic regardless of its origin, and that importers should notify authorities of any product defect within seven days, except where the products pose a health hazard, in which case they must be immediately removed from the market.
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Protection and prohibition of monopolistic practices
AmCham's Industry and Legal Affairs committees hosted Mona Yassine,
chairwoman of the Egyptian Competition Authority (ECA), and ECA
executive director Khaled Attia on March 23 at the Conrad Cairo
Hotel to speak about "Egyptian law on the protection and prohibition
of monopolistic practices." Yassine and Attia explained the structure
and role of the ECA, an independent government body whose duties
include collecting economic analysis, conducting research to detect
acts that obstruct free competition, and issuing orders to take
action in this regard. It is also expected to offer opinions on
draft laws and regulations that govern competition. Attia said that
the new anti-competition law addresses three infringements: - Horizontal
restraints: these include anti-competitive practices such as price
fixing, bid rigging, collusive tendering, geographical market division,
and restricting or limiting the production, distribution or marketing
of any product.
- Vertical restraints: the law stipulates that any agreement between
individuals and their suppliers or clients shall be eliminated if
it restricts competition.
- Abuse of dominant position, which is defined by the law as a party
having a market share exceeding 25 percent and unfairly influencing
the price or volume of the product in the market. It also encompasses
anti-competitive measures of monopolies, such as the refusal to
deal, setting discriminatory pricing or using tie-in agreements.
Attia said the law does not attempt to control mergers or acquisitions,
yet it includes a provision stating that persons or companies are
to notify the ECA after any such operation, though he admits the
legislation does not sanction any punishment for parties that fail
to do so. In addition, public utilities and a list of "essential"
products are exempt from the law.
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Corporate governance and its importance for Egypt
Speakers:
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Mr. Martin Steindl,
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Project
officer of IFC - Private Enterprise Partnership - MENA
Egypt Corporate Governance Project |
View Presentation |
AmCham's Women in Business and Legal Affairs committees held a
joint meeting on February 23 on "Corporate governance and its importance
for Egypt." Guest speaker Martin Steindl, project officer of IFC
- Private Enterprise Partnership - MENA Egypt Corporate Governance
Project, discussed the topic, explaining the essential differences
between corporate governance, which he defined as a series of structures
and processes by which corporations are directed and controlled
to ensure fair, transparent and accountable corporate behavior,
and corporate management, whose sole focus is the tools required
to operate the business.
According to Steindl, corporate governance helps to ensure that
the company is managed in the interest of its shareholders. Quality
of the board, information, incentives, shareholder protection and
stakeholder relations are key elements to guarantee good corporate
governance, he said.
Focusing on Egypt, Steindl cited the example of family-owned enterprises
(FOEs), where the dominant shareholder is a family member. In order
for these companies to be successful, Steindl stressed the importance
of having a strong board of directors that guarantees non-comprising
standards of merit-based personnel decisions, allows clear lines
of authority for different areas of business, and ensures the stability
and continuity of family policies and values. Appointing independent,
non-family directors complements the family's business skills with
the fresh strategic perspectives of qualified outsiders. It also
infuses new ideas, and ensures equal treatment of family and non-family
executives, he added.
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The new terms and conditions of the check in light of Egyptian legislation
Samir El Sharkawy, a professor of commercial law at Cairo University
spoke to AmCham's Banking, Finance & Insurance and Legal Affairs
committees on December 7 about the new terms and conditions of the
check in light of new Egyptian legislation.
The check, he said, is considered an immediate instrument of payment
- in contrast to promissory notes or bills of exchange, which are
payable only when the recipient submits them to the issuer. The
check, moreover, came into Egyptian law as the only commercial paper
whose validity is protected by the penal code. The penalty for issuing
a bad check in Egyptian law was previously set at ŁE 50 or three
years in prison, or both. The protection this law afforded bearers
of checks made checks a popular means of payment.
But the check's utility as an immediate instrument of payment was
cheapened by the common practice of postdating checks, El Sharkawy
said. More seriously, recipients were allowing issuers to write
checks for sums they knew the issuers didn't have as a means of
extending them credit.
So legislators intervened to revive the check's utility. Trade Law
No. 17 of 1999, implemented after a long delay, includes a section
governing the use of checks, which included international rules.
According to this law, the word "check" should be clearly written
on the document, checks can be withdrawn only from the issuing bank,
and a personal stamp or fingerprint can carry the weight of a signature.
Furthermore, if the amount written on the check in words differs
from the amount as written in numerals, the bank will use the words.
If the issuer's bank balance is insufficient to cover the check,
the beneficiary can reject or accept the available amount and can
receive a promissory note for the remainder. Postdated checks can
be cashed the day they are signed.
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The Egyptian Competition and Anti-Monopoly Law
- (View
presentation)
The Legal Affairs Committee held its first meeting for the new
term on October 10 with guest speaker Bill Batchelor, partner, Baker
& McKenzie LLP, United Kingdom, who addressed the topic of "The
Egyptian Competition and Anti-Monopoly Law: Potential issues in
light of European practices."
Batchelor began by stating that the European Competition Authority
(ECA) is following the implementation of Egypt's anti-monopoly legislation
and has many common areas of concern, including cartels, distribution
agreements and legal conduct. He said the ECA regards cartels -
groups that agree to fix prices, share the market and rig bids -
as anti-competitive and illegal. Often their agreements are verbal,
leaving no paper trail, which makes them particularly hard to trace.
With regard to distribution agreements, both Egypt and the ECA recognize
that suppliers do not usually compete with their distributors, but
in some cases the provisions in distribution agreements can cause
problems, particularly in cases where they set price, exclusivity
or territorial restrictions. This may not be a serious issue in
cases where a company's market share is less than 30 percent and
there are beneficial effects for society. In cases above 30 percent,
however, it is considered anti-competitive if the company is abusing
its position with distributors.
Batchelor said Egyptian authorities need to distinguish between
anti-competitive collusion and beneficial cooperation. For instance,
agreements to standardize a manufactured product usually make the
product more useful to people. Egyptian legislation does not specifically
mention beneficial cooperation, while the ECA raises questions like:
"Is there justification for fixing the price?," "what
is the combined market share for all competitors?" and "if
it is an anti-competitive act, do the benefits out weight restrictions?"
One of the trickiest aspects of anti-monopoly legislation is navigating
the tortuous aspect of legal definitions. For example, the definition
of "market control" is very difficult to specify. In Egyptian
law, it is defined as having a market share greater than 25 percent,
but it does not distinguish between the portion of this that influences
the market and the portion that does not.
The penalty defined in Egyptian law - 100 percent sales during the
period of monopolizing the market - is considered extremely high.
But in the event a company or individual is found guilty of a violation,
they can lobby the relevant ministry to avoid criminal prosecution
or reach a settlement with the prosecutor.
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