My job is to care for consumers and make sure they are not abused by the dominant positions of a few business players subjecting them to unreasonable prices or the unavailability of certain products and services, said Mona Yassin, chairperson of the Egyptian Competition Authority (ECA), in an interview with Daily News Egypt.
In light of the privatization process and increasing investments currently taking place in Egypt, the presence of the ECA has proven vital to promote a competitive culture and maintain the principles of free competition through the continuous monitoring of business practices.
Law No.3 of 2005 on the Protection of Competition and Prohibition of Monopolistic Practices was under discussion by the government and parliament for 10 years before it was approved in 2005. “It sprang from the necessity of a regulatory body to implement the rules of a free market based on true competitive forces and restricting abuse of market power that obstructs productivity and growth, Yassin said.
The ECA does not only promote competition and tend for the consumer, it is a means to ensure that the business environment continues to be lucrative in the eyes of foreign investors.
“Any output that is restricted takes from Egypt’s GDP [Gross Domestic Product], she said, referring to the cement case currently in court.
In 2006, the ECA started investigating the reasons behind the increasing cement prices. After researching the market and its players, it was evident that cement companies had formed a cartel to regulate prices, as well as agreements to restrict marketing of the product, in violation of the competition law.
As a result, 20 cement company executives are now facing Criminal Court and have been charged with fines of up to LE 10 million. The companies’ lawyers, however, have appealed on the basis of lack of information.
Despite the controversy the case created, cement prices have not decreased to this day. “Our role is not to deal with prices. Prices are just an indication that there’s an abuse behind it, she said.
Nevertheless, Yassin believes that there “is every reason for prices to go down. Cement exports are only 20 percent of production and companies have the benefits of cheap production costs, as well as subsidies, but [the problem is that] many companies are abusing their positions and not producing at full capacity.
Cement companies could have the upper hand because of the high demand for their product due to various construction projects in Egypt, as well as in neighboring countries such as Lebanon, Saudi Arabia and Sudan.
Contractors pay the prices quoted to them.
As long as the demand for their product is high, they will continue to garner profits and “even if they pay the fine every year, it won’t affect them, she said.
The cement case, however, has shed light on the necessity of amending the anti-monopoly law, by introducing the leniency program, which stipulates that the first to report about a cartel will be exempted from all charges, and increasing the fine from LE 10 million to LE 50 million or 10 percent of sales, whichever is higher, she explained.
This law should be approved by parliament during this term.
Despite the effort exerted, controlling commodity pricing has proven impossible. With the increase in prices of all food commodities and the bread queue phenomenon, the average consumer continues to suffer.
Yassin has a simple remedy for high prices: “Adequate spending, the increase in demand of goods, raises prices. So if some goods are expensive we have to refrain from buying them.
Voicing the opinion of many experts, she sees the solution in transferring the subsidy system to coupons that are used to buy commodities from outlets.
These commodities should be sold at market prices and retailers should collect their money from the government.
To those who doubt the proposed subsidy system, she says that it is natural to have resistance to anything new, “but we have to start somewhere. The problem is to establish who is poor and construct a viable system that will work.
Triggered by complaints from the public, the ECA is currently looking into the increase in prices of oil, meat and several food products. “These commodities are of priority to us now, she said.
Primarily she attributes the increase in prices to the rise in fuel prices that has affected transportation costs. “Also, when people speculate that a certain product is going to get more expensive they start stocking up on that commodity, creating an increase in demand and shortage in supply that in turn raises its price, she explained.
Trying to change the Egyptian culture and how people perceive pricing and competition is also a challenge the ECA are determined to meet. Through 44 awareness seminars, meetings and workshops given in Cairo, Alexandria and Sixth of October, people are given advice to better understand the law and are encouraged to report any infringements they detect in the market.
“We explain to producers the fundamentals of competition, cartels, infringements of the law and abuse of dominance that leads to the unjustified increase in prices, she said.
With only 20 employees at the ECA, Yassin is proud of the role the regulatory body plays in the business society. In two years, the ECA has successfully reached decisions in 12 out of 20 cases they have been researching.
Yassin’s job entails defying several challenges, among which are “having the right employees, maintaining their professional standards and finding the right workforce.
However, the toughest thing she deals with is meeting people’s expectations.
Due to the culture, the public think that after the ECA takes its decision in a certain case, the market will change immediately.
“To see the impact and for the market to absorb the decision, it takes time, it doesn’t trickle down easily, she said.
