Egyptian Competition Authority Sets Precedent and Tackles RPM in Vertical Agreements

On 18 May 2024, the Egyptian Competition Authority (ECA) for the first time took action against a retail price maintenance (RPM) scheme and most favored nation (MFN) clauses. Through their investigation the ECA discovered that eight manufacturers and suppliers in the household appliances market violated the Egyptian Competition Law by making RPM and MFN clauses.

In 2023 the ECA introduced guidelines limitations concerning the application of RPM and MFN clauses in horizontal agreements. Earlier this year the ECA expanded these guidelines to include a ban of such clauses in vertical agreements. The attention of the ECA to RPM and MFN clauses was in part motivated by pressures posed by several, substantial devaluations of the Egyptian Pound since 2022.

These devaluations caused retailers to introduce substantial price increases over the past years. Following these price hikes some manufacturers and suppliers started to adopt RPM and MFN clauses. Through their investigation the ECA found that manufacturers and suppliers in the household appliances market were concluding contracts with both organized retail chains and independent small stores, stipulating minimum resale prices and price unification provisions thus limiting inter-distributor competition. In addition, suppliers retaliated against distributors and retailers that did not act in accordance with the imposed minimum RPM. The ECA found that this conduct was direct violation of article 7 of the Egyptian Competition Law.