Dr.

AbdelRahman Mohamed Sayed

 To the extent that a multinational enterprise operates within the domestic marketplace
of its home country, the home country regulates it in the same way that national
enterprises are regulated.
 The most important forms of national regulation include;
(1) the regulation of competition,
(2) the regulation of injuries caused by defective products,
(3) the prohibition of sharp sales practices,
(4) the regulation of securities,
(5) the regulation of labor and employment,
(6) the establishment of accounting standards, and
(7) taxation.
 With the growth of international trade, many of these rules have been applied to
activities that take place outside the territorial boundaries of a particular state,
most notably the first three: regulation of competition, regulation of injuries caused
by defective products, and prohibition of fraudulent sales practices.
 The country most willing to apply its laws extraterritorially has been the United
States, an inclination the international community has not received kindly.
 Indeed, most countries regard such action as an intrusion into their domestic
affairs. The United States has, nevertheless, persisted; and another major player in
the international commercial community, the EU, has begun to apply its internal
regulations extraterritorially as well.
 Competition law (a.k.a. Antitrust law) is the night-watchman of market economy.
 The goal of Antitrust Law is to ensure that the market functions optimally, because
according to economists an optimal operation of the market leads to greater
welfare.
 A well functioning market leads to productive efficiency
A) the products are produced at lowest possible cost
B) no more materials are used in production than is absolutely necessary
C) Producers are forced to look at better production methods
 Competition law is a part of competition policy, that describes the way in which
governments (or super national organizations like E.U.) take measures to promote
competitive market
 competition policy :
 it must enforce competition law whenever there are harmful effects on citizens or
business.
 It must ensure that the regulatory environment fosters competition markets also with
screening proposed and existing legislations.
 It must develop a competition culture in the society in which it operates.
 An early example was enacted during the Roman Republic around 50 BC. To
protect the grain trade, heavy fines were imposed on anyone directly, deliberately,
and insidiously stopping supply ships.
 While the development of competition law stalled in Europe during the late 19th
century, in 1889 Canada enacted what is considered the first competition statute
of modern times. The Act for the Prevention and Suppression of Combinations
formed in restraint of Trade was passed one year before the United States enacted
the most famous legal statute on competition law, the Sherman Act of 1890.
 In the 1800s, in US there were several cartels
in the form of “trusts”.
 They controlled important sectors of the
economy, like railroads, oil, steel, sugar.
 The trusts threatened from all sides to bring
the American economy under their control.
 Prices were high, and quality low.
 In the United States, the principal law regulating anticompetitive activity is the
Sherman Antitrust Act of 1890.
 Section 1 of the act prohibits contracts, agreements, and conspiracies that restrain
interstate or international trade.
 The American courts have interpreted this as applying only to conduct between
two or more parties and only to contracts that unreasonably restrain trade.
 In determining whether a particular activity violates §1, the courts ordinarily do so
on a case-by-case basis using a so-called rule of reason. That is, “the factfinder
weighs all of the circumstances of a case in deciding whether a restrictive practice
should be prohibited as imposing an unreasonable restraint on competition.”
 Over the years, however, certain agreements or joint actions involving interstate (but
not international) trade have come to be classified as automatically illegal, or per se
violations. These include
 (1) horizontal price fixing (where competitors at the same level expressly or
impliedly agree to charge the same price for competing products),
 (2) vertical price fixing (where a seller at one level sells goods to a buyer at a
different level on the condition that the latter will not resell below an agreed-upon
price),
 (3) horizontal market division (where competitors agree not to sell in each other’s
territories), and
 (4) joint refusals to deal (i.e., group boycotts).
 Once a particular kind of activity is classified as a per se violation, the courts do not
apply the case-by-case rule of reason analysis but proceed directly to a consideration
of the appropriate remedy in the particular case.
 Section 2 of the Sherman Antitrust Act forbids monopolies and attempts to monopolize
commerce or trade either between the states of the United States or in international
commerce affecting the United States.
 Unlike Section 1, it applies to the conduct of a single enterprise if the enterprise is a
“dominant firm,” that is, a firm that “has the power to control the price” of the
commodity it produces and has the ability to “exclude competitors from the market.”
 To prove a violation, a plaintiff has to show that the defendant intended to monopolize
the marketplace. This is normally done circumstantially, by showing a practice of
discriminatory pricing, of dumping (i.e., selling goods below their cost of
production), of using tying clauses (i.e., requiring purchasers of one product to buy
other unrelated products), or similar conduct.
 The Clayton Act of 1914 was enacted to give more teeth to the Sherman Antitrust Act,
both by expanding its enforcement provisions and by defining certain specific acts that
constitute unfair business competition. These include exclusive dealing and tying
clauses, mergers that result in a monopoly, and interlocking directorates. The
Robinson-Patman Act of 1936 was added to the panoply of American anti-trust law to
make price discrimination illegal.
 The Law No. 3 of 2005 on the Protection of Competition and the Prohibition of
Monopolistic Practices.
 In the application of the provisions of this Law, dominance in a relevant market is the
ability of a Person, holding a market share exceeding 25% of the aforementioned
market, to have an effective impact on prices or on the volume of supply on it,
without his competitors having the ability to limit it.
 The provisions of this Law shall apply to acts committed abroad should these acts
result into the prevention, restriction or harm of the freedom of competition in
Egypt and which constitute crimes under this Law.
 Agreements or contracts between competing Persons in any relevant market are
prohibited if they are intended to cause any of the following:
a) Increasing, decreasing or fixing prices of sale or purchase of
products subject matter of dealings.
b) Dividing product markets or allocating them on grounds of
geographic areas, distribution centers, type of customers, goods, seasons
or time periods.
c) Coordinating with regard to proceeding or refraining from
participating in tenders, auctions, negotiations and other calls for
procurement.
d) Restricting the production, distribution or marketing operations,
or limiting the distribution of services in terms of its kind or volume or
applying restrictions or conditions for their availability.
 Agreements or contracts between a Person and any of its supplier or clients are
prohibited if they are intended to restrict competition.
 A Person holding a dominant position in a relevant market is prohibited from carrying
out any of the following:
a) Undertaking an act that leads to the non-manufacturing, or non-
production or the non-distribution of a product for a certain period or
certain periods of time.
b) Refraining to enter into sale or purchase transactions regarding a
product with any Person or totally ceasing to deal with him in a manner
that results in restricting that Person’s freedom to access or exit the
market at any time.
c) Undertaking an act that limits distribution of a specific product, on the
basis of geographic areas, distribution centers, clients, seasons or periods
of time among Persons with vertical relationships.
d) To impose as a condition, for the conclusion of a sale or purchase
contract or agreement of a product, the acceptance of obligations or
products unrelated by their very nature or by commercial custom to the
original transaction or agreement.
e) Discriminating between sellers or buyers having similar commercial
positions in respect of sale or purchase prices or in the terms of the
transaction.
f) Refusing to produce or provide a product that is circumstantially scarce
when its production or provision is economically possible.
g) Dictating on Persons dealing with him not to permit a competing
person to have access to their utilities or services, despite this being
economically viable.
h) Selling products below their marginal cost or average variable cost.
i) Obliging a supplier not to deal with a competitor.
 The provisions of this Law shall not apply to public utilities managed by the State.
 The Authority may, upon the request of the concerned parties, exempt some or all the
acts provided for in articles 6, 7 and 8 regarding public utilities that are managed by
companies subject to the Private Law where this is in the public interest or for attaining
benefits to the consumers that exceed the effects of restricting the freedom of
competition. This shall be done in accordance with the regulations and procedures set
out by the Executive Regulation of this Law.