Adoption of Egyptian whistleblower programme brings the effectiveness of African leniency regimes into focus

Posted in Competition Northern Africa Blog post Southern Africa

On 28 June 2020, the Egyptian Competition Authority (ECA) adopted a leniency policy under the Egyptian antitrust regime. In adding to the list of African jurisdictions with antitrust whistleblower regimes, the adoption of the Egyptian leniency policy brings into focus the divergent success of corporate leniency programmes across Africa. While the South African leniency programme has met with overwhelming success, the adoption of similar regimes in other African jurisdictions has only triggered very limited (if any) cartel enforcement. Inside Africa speaks to Chilufya Sampa, Executive Director of the Zambian competition authority, to probe the reasons underpinning the varying levels of performance of leniency regimes across the continent.

The Egyptian antitrust regime was amended in 2014 in order to allow for either total or partial immunity to be granted to whistleblowers reporting cartel conduct. Despite these legislative amendments, until the adoption of the leniency policy in June 2020, the ECA had not published any guidance on how companies should apply for leniency.

Consistent with regimes in other jurisdictions, the Egyptian leniency policy sets out the evidential and cooperation conditions that must be satisfied by applicants. The policy provides for a marker system in order to allow applicants additional time to compile an application. In terms of notable aspects, the policy states that the applicant will not be cited as a respondent in the ECA’s investigation. Accordingly, any aggrieved party will need to separately prove the applicant’s participation in the cartel in any follow-up damages claim. In addition, given that the Egyptian antitrust regime provides for individual criminal liability, the policy extends immunity to the applicant’s current and former directors and employees.

The adoption of the Egyptian leniency policy adds to the list of African jurisdictions that have introduced antitrust whistleblower programmes. This list includes Botswana, Kenya, Mauritius, Namibia, South Africa and Zambia. However, with the exception of South Africa, the adoption of leniency programmes has not seemed to have materially contributed to cartel enforcement in these jurisdictions.

In South Africa, having been introduced in 2004, the leniency policy has been fundamental to the Competition Commission’s fight against cartels. As at March 2019, the Competition Commission had received 550 applications with the majority being in the automotive components and constructive sectors. Leniency applications have been the primary means through which investigations have been initiated with only a small number of cases being triggered by information submitted by third parties. On the back of the success of the leniency programme, significant penalties have been levied with fines of nearly ZAR 1bn (approx. USD 60m) being imposed for cartel conduct in 2018/2019 alone.

This is in sharp contrast to other African jurisdictions where leniency programmes have seemingly made little impression. For example, despite the Competition and Consumer Protection Commission (CCPC), the Zambian competition authority, adopting a leniency programme in 2015, there has only been a small number of applications. Speaking to Inside Africa, Mr. Sampa, the Executive Director of the CCPC, stated that ‘the Commission has so far received only three successful leniency applications that have resulted into meaningful investigation of cartel conduct’.

Explaining the reasons for the limited application of the Zambian leniency programme to date, Mr. Sampa added that ‘The number of leniency applications has relatively been low and this could partly be attributed to the way the leniency programme is administered. In Zambia, cartel conduct is a criminal offense and therefore the Commission cannot give amnesty to applicants without the involvement of the Office of the Director of Public Prosecution. In this regard, some parties feel that the Commission may not have full control of the proceedings and outcome of the leniency application.’

This issue of managing both corporate and individual liability has broader application to other jurisdictions. For example, it was anticipated that the introduction of individual criminal liability in May 2016 under the South African regime could undermine the success of the leniency programme given that, similar to Zambia, the prosecution of individuals under competition legislation falls within the jurisdiction of another institution, the National Prosecution Authority. The Competition Commission has not yet commented on the impact of criminalisation but has noted that, while still a main contributor, the leniency programme has had a declining significance compared to previous years. In this regard, it is notable that the number of applications for the last two reported years are among the lowest since the adoption of the programme in 2004.

Aside from the impact of individual criminal liability on corporate leniency, the Zambian experience highlights that the mere adoption of a leniency programme will not necessarily lead to an influx of applications. Other conditions must also be satisfied such as the predictability of the regime as well as the material likelihood of cartel enforcement absent the application. It is within this context that the success of the Egyptian leniency policy will be evaluated. While the ECA has already addressed the issue of individual criminal liability, it remains to be seen whether the policy will lead to an increased level of cartel enforcement in Egypt.

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