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Egyptian Competition Authority Issues Press Release on Abuse of Dominance in the Food Delivery Platforms Market

 

Highlights

The Egyptian Competition Authority (“ECA”) considers the food ordering and delivery electronic platforms market as one of the “promising” digital markets, with an expected growth of up to USD 131,000,000 in 2024. Accordingly, it conducts a market investigation to uncover violations of a key platform operator. In its press release dated 26 May 2022 (“Press Release”), the ECA covers several grounds for abusing a dominant position carried out by the said operator.

The Press Release tackles three grounds for abusing the dominant position in violation of Article (8) of the Competition Law no.3 of 2005, as further elaborated below.

In addition to establishing the existence of the violations, the ECA announced the implementation of administrative measures to mitigate the competitive harm arising from such violations and admission of the request for settlement submitted by the operator in breach. 

 

The Letter of the Press Release

The first violation detected by the ECA pertained to an exclusive dealing obligation whereby the dominant undertaking prohibited restaurants from dealing with competitors, which – in addition to creating barriers to entry and expansion in the relevant market – enhanced the market power of the dominant undertaking and threatened the viability of its competitors in the said market. Therefore, the ECA deemed that such practice ultimately harmed consumers because it prevented them from benefitting from better offers/prices which would otherwise be available under competitive conditions.

The second violation was that of bundling as, to benefit from the services of the dominant undertaking, restaurants were “forced” to accept the food delivery service to the final consumer. The ECA deemed that the competitive harm arising from such restriction extended to the market of food delivery services (a separate market from the one in which the violation was detected).

The third violation is restrictive in that the dominant undertaking obliged food-providing companies to unify their prices throughout all mediums of sale. Such price maintenance obligation prohibited said food-providing companies/restaurants from exercising their freedom in setting prices with different competitors of the dominant undertaking and thus safeguarded the dominant position of the undertaking.

 

Our Take

The Press Release sheds light on the continuous adamance of the ECA towards the enforcement of Competition Law provisions and its proactive approach to supervising and regulating markets under the Chairmanship of Dr Mahmoud Momtaz. An intriguing aspect of the Press Release is that it tackles electronic markets with a platform nature, which has recently become a hot topic in the international antitrust domain.

While the relevant market was digital food ordering and delivery platforms, the Press Release is a practical manifestation of the violations prohibited under Article (8) of the Competition Law no.3 of 2005 regarding the abuse of dominance. provides practical guidance which can be applied mutatis mutandis to other markets.

On an ending note, it is worth reading the Compliance Guidelines recently issued by the ECA, which offer detailed guidance on the practices to be avoided or adopted (as applicable) to maintain antitrust compliance.

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