Egypt’s three major mobile operators, Mobinil, Etisalat and Vodafone, have been referred to the prosecutor general by the Egyptian Competition Authority (ECA), following charges of engaging in an anti-competitive ‘cartel agreement,’ according to an official statement issued by the ECA.
“Following an investigation ECA has concluded that the three mobile operators have violated article (6) of the ‘Egyptian Competition Law’ and following the recommendation of the ECA board they have been referred to the prosecutor general,” the statement read.
The ECA claimed that the three mobile operators’ conspired in an effort to inflate prices under the pretext of charging a stamp tax. In total, Mobile operators collect around EGP 500m in stamp taxes .
The charges follow an October 2012 complaint to the ECA against the mobile operators for simultaneously adding the Stamp Tax to prepaid recharge cards beginning in March 2012.
“We are very surprised by this decision. We implemented a law and it’s baffling how we can be prosecuted for enforcing it,” said Khaled Hegazy, the legal and external affairs director at Vodafone.
According to the ECA’s chairwoman Mona El-Garf, the Egyptian Competition Law prohibits agreements between competitors should they result in price manipulation such as increasing, decreasing or fixing prices.
“When we are called [by the prosecutor general] we will offer evidence that we did not break any laws,” Hegazy added.
El-Garf added that the Stamp Tax law is not a violation in itself; the violation concerns, the conspiracy between the three mobile companies to inflate prices.
“Operators were previously discounting the Stamp Tax to attract the consumers however in March 2012 they made a unilateral decision to reinstate the tax without notifying the National Telecommunication Regulatory Authority (NTRA), who would latter approve these measures,” El- Garf said.
“We notified the NTRA and I have a written approval on that decision,” Hegazy said adding that companies “will seek the support of the NTRA on this.”
Hegazy said that the market is “very dynamic” and the prices that the companies set are based on the cost of services offered.
Earlier in February, Mobinil and Etisalat were referred to prosecutor general after failing to provide the ECA with information requested.