Related Persons, Leniency &

Mergers

Class 10
By: Mohamed ElFar
DLA Piper - Egypt

Article 5 of the Executive Regulations of the ECL

Related Parties that are composed of;
two or more persons,
each of them has an independent legal personality,
where the majority of stocks or shares of one of them is owned, directly or indirectly,
by the other party; or,
where the majority of stocks or shares in both parties are owned by one party.
Related parties also include the person or persons who are subject to the actual control
of another person. Actual control means every arrangement, agreement or ownership of
stocks or shares, regardless of its percentage, in a manner that leads to the control of
the management or decisions-taking.

Related Persons
Single Economic Unit

Types of control:
1. De jure (Ownership of more than 50% shares, Veto
rights)
2. De facto (BSkyB Case)
. Responsibility of the Parent Company.

Leniency
In case of committing any of the crimes mentioned in Articles
(6) and (7) of this Law, the court may exempt, up to the half
of the sanction decided thereby, violators who take the
initiative to inform the Authority of the offence and submit
the supporting evidence, and for those whom the Court
considers to have contributed to disclosing and establishing
the elements of the offense at any stage of inquiry, search,
inferences gathering, interrogation and trial processes.

Old Leniency
Old Leniency Program
1. No automatic immunity.
2. 50% discount in the final penalty.
3. Does not differentiate between whistle blower and
those who come after.

The New Leniency Program

In case any of the agreements or contracts prohibited under Article 6 of this
Law were commented, the first person to come on its own initiative to inform
the Authority and to hand all the supporting evidence at hand and remains
fully cooperative with the Authority during the inspection stage and this is
before requesting to move the criminal action or taken any related action shall
be immune from the sanctions stipulated in this Law.
In all cases, this immunity does not apply to the persons in this cartel who
were promoting and/or advocating its presence.
The Court may exempt up to 50% of the sanction imposed to any person who
did not benefit from the immunity granted in the previous paragraph of this
Article so long as it contributed in discovering and proving the characteristics
of this crime during any stage.

Mergers
Horizontal Mergers
Significant Impediment to Effective Competition, in particular,
the creation or strengthening of a dominant position.
(SIEC)
Herfindahl Hirschman Index (HHI)

Theories of Harm:
Non-coordinated Effects
Coordinated Effects

Non-Coordinated Effects (Unilateral Effects)

Factors Taken into Consideration:
High market shares of merging firms
The merging firms are close competitors
Limited possibilities for customers to switch
Competitors will unlikely be able to increase supply if
prices increase.

Coordinated Effects
Requires the following;
1. Monitoring Mechanism
2. Deterrent Mechanism
3. High Entry Barriers

Vertical Mergers
Non-coordinated Effects
1. Input Foreclosure
2. Customer Foreclosure
. To assess whether there will be foreclosure;
1. Ability to foreclose
2. Incentive to foreclose
3. Effect on competition
. Coordinated Effects

Conglomerate Mergers
Non-coordinated and coordinated effects

Questions?

Thank you