A draft anti-trust law faced a barrage of criticism when it came up for debate before the People's Assembly last week. Gamal Essam El-Din reports With an eye on the pitfalls confronting Egypt's fledging free market system, the economic committee of the People's Assembly -- Egypt's lower house of parliament -- began debating a long-awaited anti-trust law on 17 August. The draft law seeks to fill in the legislative gap that Egypt must bridge in order to promote a competitive domestic and global free market system. The 39-article bill, known as the Anti-Trust and Competition Promotion Law, introduces a number of articles aimed at tightening government control on a number of monopolistic practices that negatively affect free competition in the Egyptian market and seriously reduce Egypt's export volume. According to Investment Minister Mahmoud Mohieddin, while combating monopolistic practices is essential in any free market systems, it is especially important in emerging market economies like Egypt. "More than 110 countries now have anti-trust legislation and we drew on their experiences in this field in drafting ours," Mohieddin said. Under the new draft law, a monopoly is defined as the practice of enabling a business or a group of merged businesses to corner at least 65 per cent of the trading of a certain commodity in the local market. The law applies to individuals and businesses involved in any financial or economic activity within the trade, industry or services sectors. However, the bill stipulates that a number of state-owned strategic authorities, including the water, gas, electricity and petroleum authorities, will not be subject to the law. In addition, the cabinet is empowered to price certain strategic products, namely oil products, medicine and some subsidised goods, for unspecified periods of time. To guard against the emergence of monopolies, the draft law establishes an independent Anti-Trust and Competition Protection Council (ACPC). According to Minister of Industry and Trade Rashid Mohamed Rashid, the ACPC will have the power to closely monitor the effect of any monopolistic deal on free market competition. The bill's explanatory note said ACPC's head will be empowered to form a special fact-finding committee entrusted with inspecting certain dangerous monopolistic practices and overseeing the licensing of mergers. In their initial reaction, opposition MPs launched a severe attack against the draft anti- trust law. The attacks, led by leftist MP Abul- Ezz El-Hariri, alleged that besides the fact that the bill comes at least 10 years late, it is clearly tailored to cushion some business tycoons who are members of the ruling National Democratic Party (NDP) from any anti-monopolistic regulations. In particular, El-Hariri singled out Ahmed Ezz, a leading NDP member and chairman of parliament's Plan and Budget Committee. According to El-Hariri, it is a big surprise that the draft law decided that "the dominant share monopoly" be raised from 35 per cent (as it was stated in earlier drafts of the law) to 65 per cent. "This share was raised from 35 per cent to 65 per cent in order to serve the needs of Ezz," said El-Hariri, arguing that "this makes the bill aimed at enhancing the proliferation of monopolies rather than fighting them." Ezz has been a target of criticism in leftist and independent opposition circles throughout the year. Ezz, a member of the ruling party's general-secretariat, is widely considered Egypt's number one monopolist, as he controls around 65 per cent of the steel market. Early this year, opposition newspapers and MPs launched a wide-scale campaign against Ezz, blaming his monopolistic practices for skyrocketing steel prices. Parliament is expected to discuss a fact-finding committee's report on Ezz's role in pushing steel prices up when it reconvenes next November. Opposition MPs also argued that the draft anti-trust law came too late, as the local market has become rife with a diversity of monopolies in essential sectors such as the cement, fertiliser, retail and wholesale marketing and metallurgical industries. In response to the attack, Minister Mohieddin indicated that the draft law does not measure a monopoly by a business's size or its dominant share in the market, but by the ethics of its business practices. "Controlling 65 per cent of the market of a certain product must not automatically be branded a monopoly. This kind of control will be just placed under ACPC's magnifying eye. It will face a penalty only if it tries to breach monopoly regulations, impose certain prices and expose consumers to financial risks," said Mohieddin. "A producer controlling just five per cent of the market of a certain product could be labelled a monopolist when it acts to breach the ethics of competition," he said. Mohieddin also argued that Egypt desperately needs mega businesses in several sectors to raise the country's export competitiveness and increase the benefits these bring to the country, such as technology transfer, quality upgrading and increased investments. Because "the private sector generates most of the national income (70 per cent) and receives most of the banking credit," Mohieddin argued, "the anti-trust law must be applied carefully in order not to riddle the private sector with new bureaucratic obstacles."
