Availability of private enforcement in respect of competition law infringements and jurisdiction
Scope for private enforcement actions in Egypt
Legally, the scope of private enforcement in Egypt is very wide. According to the established principles of civil law, any person has the right to seek damages for any harm sustained. In other words, any person who committed a fault is liable to compensate it (Article 163 of the Egyptian Civil Code).
In this respect, civil claims may be brought either as stand-alone or follow-on actions. In addition, civil claims may be brought before the criminal court as a direct action (due to the criminal nature of the Egyptian Competition Law (the “ECL”)) or brought before a civil court. According to the established case law of the Egyptian Court of Cassation, parties injured as a result of a criminal act can choose between either following the criminal court route or bringing an action before the civil court to seek damages. 1
However, due to the fact that criminal cases arising from the ECL cannot be initiated without the submission of a prior request from the Chairperson of the Egyptian Competition Authority (the “ECA”), 2 there is a clear limitation on brining civil actions before criminal courts.
That said, it is widely accepted that a civil claim may still be brought before a civil court for faults arising from an infringement related to the ECL. This is because the ECL states that its decisions are without prejudice to the liability arising from those infringements. 3 Accordingly, proving the crime is not a precondition to bringing a civil claim. Therefore, as stated, it is generally accepted that civil claims can be brought before the civil courts for infringements arising from the ECL.
In this respect, if plaintiffs choose the civil route, they will have standing before the Egyptian Economic Civil Court. This is a specialized court in civil disputes arising from economic laws and has exclusive jurisdiction to review all disputes arising from a specified set of laws listed therein which have an economic nature, including the ECL.4
Applicable limitation periods
If a plaintiff chooses to bring a stand-alone civil damages action, the applicable limitation period shall be three years from the date the plaintiff became aware of the infringement or 15 years from the date the infringement was committed (Article 172/1 of the Egyptian Civil Code). However, as noted, infringements of the ECL are also of a criminal nature. Therefore, the limitation period of the civil claim before civil courts will not start until the limitation period of the criminal case is met. Generally, the limitation period of criminal cases is three years from the date of committing the crime. If the crime is of continuous nature (e.g., exclusivity of a dominant firm or a cartel agreement), the limitation period does not start until the last day upon which the crime was committed. As for the limitation period for follow-on actions, it is related to the limitation period of enforceability of final judgments issued by the criminal court. For example, if the ECA initiates a criminal action for a certain anti-competitive conduct, the injured parties may have the right to intervene in the case. However, if the ECA does not initiate an action and instead waits for a final judgment, the limitation period will be three years from the date of issuance of this final judgment. 5
In relation to stand-alone actions before the civil court, an appeal on a point of fact or law can be made by a plaintiff to the Economic Civil Court of Appeal. In this respect, the Economic Court has full power to review any points underpinning the appeal and has the choice to alter the first instance decision in whole or in part. Furthermore, the plaintiff may finally appeal to the Court of Cassation on points of law only.
As for a civil claim which is brought in relation to a criminal action, if the defendants are acquitted, the plaintiffs will not have the right to appeal the decision before the Economic Criminal Court of Appeal, unless an appeal was submitted by the Public Prosecutor’s Office.
Availability of class actions for infringement of competition law and/or damages available in Egypt
Under Egyptian law, there is no concept of class/group actions. Under a common classic form of action, which is the main form of damages action in Egypt, plaintiffs may choose to file cases individually or collectively by assigning a certain lawyer to handle the case on their behalf. In these two possibilities, other consumers may have a vested interest and decide to intervene/opt in to the case.6
Under the Egyptian regime, another possible method of representation is that of unions. In this respect, unions are entitled to bring actions on behalf of their members, whenever their interests are endangered or harmed. 7 However, when it comes to associations (e.g., consumer protection associations (the “CPAs”)), the matter is not sufficiently clear. Article 19 of the draft ECL presented by the government for parliamentary discussions gave a clear right to CPAs to bring actions before competent courts. 8 This meant that, according to this draft, CPAs had the right to bring stand-alone direct actions before criminal courts or civil actions before civil courts. However, this part of the Article was repealed just before it was submitted to the Shura Council and later to parliament. Nonetheless, the explanatory memorandum accompanying the submitted draft law reassured the complementary role of CPAs in the enforcement of the competition law.9 Furthermore, in order to add more weight to their central role, the ECL stipulated that the board of the ECA would include their representative. 10 These indications mean that CPAs were intended and are expected to play an active role in the competition enforcement regime.
Although the wording giving the clear right to CPAs to act was repealed, it is still widely accepted that CPAs are entitled to claim damages on behalf of their members, based on the general rules of litigation. This is because CPAs were established for a specific purpose: consumers’ protection. Hence, CPAs have the right to defend the interests of their members whenever they are endangered or threatened.
Furthermore, according to Article 23(a) of the Law on Consumer Protection, CPAs are granted the right to bring legal actions on behalf of consumers (or intervene in ongoing cases), as long as their interests are affected, 11 although neither this law nor its executive regulations elaborate on this right that was granted. It is arguable whether it is possible for associations to bring civil actions on behalf of an unidentified number of consumers (non-members) or to represent their members or other identified victims if they have sustained damages. However, it may be contended that the intention of the drafters, i.e., government and parliament, was to introduce a new form of action, namely that of an opt-out “class action” that would nevertheless be restricted to CPAs and not to individual consumers.
Nevertheless, in practice, this Article is merely used within the existing traditional limits of action. CPAs do bring actions on behalf of consumers who submit complaints to it, if they (CPAs) have sufficient resources. 12 Therefore, it is confined within the traditional boundaries of actions and, to date, there is no evidence that there was any attempt to extend its usage as an opt-out mechanism.
Conduct of proceedings and costs
Burden of proof
In a civil stand-alone action, the claimant will bear all the burden to prove the existence of fault, harm and causal link.
In this regard, it is of relevance to highlight the binding nature of the ECA’s decisions. However, nothing indicates that these decisions are of any binding nature to courts in general and civil courts in particular. 13 Furthermore, there is a consensus, which is clear from the numerous judgments of the Court of Cassation, that expert opinions (i.e., the ECA’s decision) are not binding to courts and that judges can freely disregard their opinions and rely in their judgments on other evidence that may be provided. 14 In this respect, there is not any requirement on the court to respond to or give reasons why it did not rely on any expert report. 15 Accordingly, a claimant in a stand-alone action will have to prove the presence of a fault from the outset and should not rely solely in any way on the ECA’s decision, other than its indicative/persuasive value.
For example, in the Flat Glass case, the ECA decided that the defendant was abusing its dominant position and a criminal case was initiated. Shortly afterwards, the criminal case was settled. However, when an injured party brought a damages claim relying on this report, the court refused to rely solely on the previous finding of the ECA. Instead, the court appointed an expert from the ECA’s economists to determine whether there was fault or not and subsequently if there was sufficient fault to quantify the damages. 16
Joint and several liability of cartel participants
According to the Egyptian Civil Code, “[e]very fault which causes harm to another imposes liability for damages upon the person who committed it.” This means that a dominant person will be liable for damages in case of committing any abuse of dominance.
However, for cartel cases, it can be argued that cartel members can be jointly liable for the harm committed to the claimant. The plaintiff must show that the harm caused was a direct consequence of the violation of the ECL by the defendants. 17 It should be noted that this condition may be satisfied even if the plaintiff was not a direct customer. 18 For example, if there was a price-fixing cartel at the production level, a final customer who bought the overcharged products from a wholesaler or a retailer has the right to seek damages from all those who were involved in the cartel. This is on the condition that the final customer proves the presence of a cartel (if there was not a prior judgment) and that the overcharge is due to the identified cartel (and not as a result of overpricing by any distributors that was passed on to him).
In practice, it is more likely that a plaintiff would bring an action mainly against the specific cartel member from whom a purchase, for example, was made. This is because in doing so it will be much easier for the claimant to prove the direct and actual relation to, and damage sustained arising from, the said cartel.
Furthermore, the Egyptian legal system is still not fully acquainted with the concept of umbrella damages. Therefore, it is less likely that someone who bought something from a non-cartel member would be able to seek damages from that non-cartel member. It may have the chance, although very slim, to obtain damages from the cartelists themselves.
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
In Egypt, courts rely mainly on evidence provided by the parties. Hence, it is usually burdensome for plaintiffs to prove the presence of a fault and to seek information kept by third parties. The following extract, which is of particular relevance to the situation in Egypt, reflects on some of these difficulties:
“… [c]ompetition law disputes are characterised by wide information inequalities and symmetries between litigants. Usually most of the inculpatory information will be in the hands of the defendant while the plaintiff will be merely relying on indications. These problems are particularly grave for stand-alone actions. Indeed, many actions fail because the plaintiff cannot have access to information held by the defendant or sometimes by third parties, and because he essentially has the inevitable task of proving a competition law infringement in the slightest detail. Thus the problem of proof can be a serious obstacle to effective private enforcement.” 19
To address this problem (according to the general rules), the Egyptian legal regime sets rules by which litigants may request an order from the court to oblige the other party, or even a third party, to disclose certain specific documents or information the other party or third party may hold. 20 According to the law, a litigant may request the disclosure of a document the other litigant is thought to possess in one of the following cases:
i) if the law permits requesting the other litigant to present the document;
ii) if the document is common between the plaintiff and the defendant; and
iii) if the litigant depended on the document on any stage of the litigation.
In the first scenario, the law allows for the requesting of documents. For example, Article 28 of the Commercial Law gives the right to the court, on its own initiative or upon the request of one of the parties, to order the other litigant to present certain documents that such litigant may possess. Interestingly, the party requesting the document is not allowed to view it. This right to view the document is limited to the court and to any independent experts whom the court may choose to appoint. This condition maintains and respects the confidentiality of commercially sensitive documents and information.
As a result, plaintiffs in a stand-alone case may request the court to order the defendant to present any kind of document, in order to prove the presence of an anti-competitive practice, without prejudicing its confidentiality. This means that defendants would be less suspicious about the exposure of their commercially sensitive information.
Parties are not required by law to disclose any information before an action is triggered by a claimant.
Average length of time from issue of claim to judgment in Egypt
A claim in civil courts may take from two to three years depending on the complexity of the case and whether it is a stand-alone or a follow-on action. Actions that follow a judgment from a criminal court are much easier and would take less time than stand-alone actions or even actions that simply follow a decision of the ECA. This is because a criminal judgment is binding to the civil court, which means that the finding of an infringement by the criminal court will be of great help to the claimant in possible subsequent cases before the civil court. 21 In this respect, the burden will be reduced to prove the presence of harm and the causal link only as the finding of fault will become almost undisputed by virtue of the criminal court judgment.
Average cost from issue of claim to judgment in Egypt
Lawyers’ fees are usually the main substantial part of the cost of any civil or criminal case. However, other legal fees, depending on the court, are generally not substantial.
Third Party funding/alternative funding
There are no main restrictions that can limit any source of funding. However, it is uncommon for third parties to fund litigation in Egypt.
Alternative methods of dispute resolution
To date, no ECL-related cases in Egypt have been resolved through arbitration. However, arbitration in Egypt has dealt with non-compete clauses as a form of unfair competition under the Egyptian Commercial Law and not the ECL.
A main obstacle to the development of arbitration under the ECL is the question on the arbitrability of matters related to the ECL in the first place. According to the Egyptian arbitration procedures, criminal law matters are not arbitrable. Therefore, it remains unclear whether damages claims that may be brought to arbitration would be accepted or if the tribunal would dismiss the case and refuse to commence proceedings due to the criminal nature of the ECL. Nonetheless, there is another sound argument that states that arbitration in civil disputes related to the ECL is still possible, as it is in many cases a contractual matter that is unrelated to any criminal aspect. In any event, it remains to be seen which position the arbitration tribunals would adopt.
Availability of damages and quantification
According to Article 171 of the Egyptian Civil Law, damages are more likely to be granted in monetary form. 22 However, whenever relevant – and upon the request of the plaintiff – the court may, in its decision, issue orders to stop certain conduct and put an end to the fault. 23 Furthermore, the Court of Cassation has stated that its priority is to grant permanent injunctions whenever possible, so that the fault that was committed by the defendant ceases. 24 This will enable plaintiffs to not only compensate for their loss but also prevent defendants from engaging in certain anti-competitive conduct.
Articles 170, 221 and 222 of the Egyptian Civil Law stipulate that the aggravating and mitigating circumstances taken into consideration by a judge are those related to the plaintiff (victim) and not the defendant. 25 For example, the role of the defendant in the infringement as a ringleader in a cartel, or his recidivism, is not considered in quantifying the amount of damages. Moreover, direct damage is the only kind of loss taken into consideration. 26 However, it should be noted that there is not a fixed maximum amount of damages, which gives the judge room to assess the harm sufficiently.
Furthermore, in the Flat Glass case, even though the plaintiff quantified its damages to be an amount of approximately GBP10 million, the court referred the case to an expert from the ECA to determine the amount of damages. In the expert’s report, the only factor that was taken into consideration in the calculation of direct damages was the exact amount of damages and loss of profit in abstract, without considering any aggravating or mitigating factors. 27
Punitive and exemplary damages
Under the Egyptian legal regime, the general rule is that damages are solely of a compensatory nature. Therefore, there is no possibility of granting punitive damages due to the corrective justice philosophy behind the whole regime.
Availability of interim or final injunctions in respect of an alleged competition law infringement
In Egypt, both the ECA and courts have the right to issue interim measures due to the specific nature of the ECL inspection and, given that it may be a lengthy process, the imminent and irreparable damage that may arise therefrom.
The first condition for adopting interim measures/injunctions in Egypt is that the ECA or courts have to define the circumstances where urgency is required, i.e., where there is imminent irreparable damage to the protected right that cannot be preserved under regular forms of litigation, even if exceptionally shortened. As for the other condition, the ECA/court is expected to consider whether the claim at hand would affect the right contested or whether it can deliver an interim measure without affecting it. 28 If the former were to arise, the ECA or court would be going beyond its scope of jurisdiction by rendering rulings and not just interim measures.
Moreover, the ruling on the interim measure case does not affect the main claim in any way, as its purpose is limited to the interim aspect and does not extend beyond that point. 29 Furthermore, it is important to note that the ECA/court has exclusive competence in evaluating these conditions and in deciding whether it is satisfied or not with the urgency and immanency of the matter. 30
To date, no interim measures have been issued from the ECA or any court in relation to ECL disputes. However, the ECA has attempted on occasion, and is willing whenever suitable, to issue interim measures.
Other types of relief
Article 345 of the Egyptian Penal Code prohibits any action which aims to increase or decrease prices, and it lists a number of such prohibited practices, as well as finally stipulating “or any other deceiving method.” This Article is of specific relevance to the enforcement of the Egyptian competition regime, as its complementary role has been repeatedly reassured during parliamentary discussions. 31 Therefore, although stand-alone actions before the criminal court are currently unacceptable under the ECL, building stand-alone actions before criminal courts may still be possible by relying on other laws.
From a practical perspective, the plaintiff, together with the Prosecutor’s Office, will work on proving the same violation of the law. This is due to the fact that, for the plaintiff to satisfy the first requirement (i.e., the occurrence of a fault), the plaintiff has to prove the presence of an infringement of the law, despite this also being a duty of the Prosecutor’s Office. Therefore the plaintiff and the Prosecutor’s Office would be working in parallel in an attempt to reach the same goal initially. Yet, if they were able to prove the presence of a violation, the plaintiff would have to prove the rest of the requirements (i.e., damage and causal link), as such claimant would be seeking compensatory damages for private interest. However, since the adoption of the ECL, no direct actions have been brought under Article 345 to date, but it remains a possible route for action.
Private enforcement of the ECL is still an emerging field of law. The very few civil cases that have been brought to date were mainly based upon a previous violation finding by the ECA. Furthermore, in the Egyptian market, the main concern facing potential claimants is not primarily that of costs but of the time duration of the proceedings and the possible disciplinary retaliation of cartel members or the person abusing its dominant position. Until these challenges are effectively addressed, the development of private competition litigation in Egypt is likely to be limited.
1 See, e.g., Court of Cassation decision number 1680, Judicial Year 2 of the Criminal Circuit on May 16, 1932.
2 Article 21 of the Law No. 3 of 2005 on the Protection of Competition and the Prohibition of Monopolistic Practices as amended by the Law No. 56 of 2014.
3 Article 20/3 of the ECL.
4 Law No. 120 of 2008 on the establishment of Economic Courts.
5 Court of Cassation decision number 2659, Judicial Year 61 of the Civil Circuit on January 21, 1996.
6 Article 251 of the Law 50 of 1950.
7 Sorour Fathy, Al-Waseet fi Al-Ijra’at Al-Jina’eya (The Medium on Criminal Procedures), Part 1, 326–9, Cairo Uni. Press, 1979.
8 Article 19 of the draft law on “The Regulation of Competition and Prohibition of Monopolization,” prepared by the Ministry of Supply and Internal Trade in November 1998. This draft was the one chosen to be adopted finally by the government and to be sent to the Shura Council and later to parliament.
9 Memorandum Accompanying Draft Law on the Protection of Competition and the Prohibition of Monopolistic Practices.
10 Article 12(5) of the Law 3 of 2005.
11 The wording of “the consumer” refers to all consumers as explained by the President of the Parliament. Parliamentary Records, 67th Session, p. 35, May 9, 2006.
12 If there is insufficient funding available to bring the action on behalf of the consumer, the CPA refers the complaint to the Consumer Protection Authority. In all cases, consumers do not pay any fees or expenses.
13 In the Steel Rebar case, the ECA’s report ruled that although the investigated company enjoyed a dominant position, this dominance was not abused. However, the Court of Cassation – Criminal Circuit upheld the decision of the Economic Criminal Court of Appeal and confirmed its finding that the dominant person had abused its dominance. This clearly indicates that the ECA report was not of any binding nature to the court.
14 Court of Cassation decision number 1363, Judicial Year 62 of the Civil Circuit on December 26, 2013.
15 Court of Cassation decision number 2898, Judicial Year 84 of the Criminal Circuit on November 26, 2014.
16 See, generally, Expert’s Opinion submitted in case number 5 of 2013 Economic Civil Court of Appeals – Mansoura (unpublished).
17 Al-Gharib Mohamed, Al-Ihtekar Wa Al-Monafasah Gheir Al-Mashrou’a (Monopoly and the Unfair Competition), p. 301, Dar Al-Nahda Al-Arabeya, 2004.
18 Salama Ma’moun, Al-Ijra’at Al-Jana’eya fi Al-Tashree’a Al-Misry (Criminal Procedures in the Egyptian Legislation), pp. 234-8, Vol. 1, Dar El-Nahda Al-Arabeya, 2003–2004.
19 Komninos Assimakis P., EC Private Antitrust Enforcement: Decentralised Application of EC Competition Law by National Courts, at pp. 225-6, Hart Publishing, 2008.
20 Law No. 25 of 1968 on the Proof of Commercial and Civil Provisions.
21 Salama, at 351.
22 Al-Sanhouri Abdelrazak, Al-Waseet Fi Sharh Al-Qanoun Al-Madani (The Medium in Explaining the Civil Code), Sources of Obligations, at 815-8, Manshourat Al-Halabi Al-Hokoukeyah, 2000.
23 See Article 66(2) of Law No. 17 of 1999. In this Article, it is clearly stated that it is up to the court to grant an injunctive relief whenever necessary. Article 171(2) of Law No. 131 of 1948.
24 Court of Cassation decision number 11, Judicial Year 17 of the Civil Circuit on January 1, 1948.
25 Al-Sanhouri, at 819-21.
26 Al-Jammal Mustafa, Al-Nazareya Al-A’mmah Lil-Iltezamaat (The General Theory of Obligations), p. 402 – Al-Dar Al-Jame’eya, 1987.
27 See, generally, Expert’s Opinion submitted in the case number 5 of 2013 Economic Civil Court of Appeals – Mansoura (unpublished).
28 Court of Cassation decision number 48, Judicial Year 19 of the Civil Circuit, November 23, 1950.
29 Court of Cassation decision number 243, Judicial Year 20 of the Civil Circuit, December 20, 1951.
30 Court of Cassation decision number 151, Judicial Year 19 of the Civil Circuit March 22, 1951; Court of Cassation decision number 358, Judicial Year 20 of the Civil Circuit, on June 12, 1952.
31 The Parliamentary Records, 27th Session, p. 63, February 12, 2005.