Egypt's mobile carriers accused of forming a cartel: ECA

[DJKeefy]

Egypt’s three mobile operators have been referred to the public prosecution on accusations of monopolistic practices, following a request by the Egyptian Competition Authority (ECA), the regulatory body stated Sunday.

The ECA added that the Egyptian Company for Mobile Services (Mobinil), Vodafone Egypt, and Etisalat Misr have illegally formed a cartel to collectively raise prices for mobile services, costing consumers more than LE500 million ($72.6 million) annually.

Last year, the ECA opened an investigation regarding mobile carriers after receiving a notice accusing them of simultaneously burdening consumers with a stamp tax.

"Even though implementing a stamp tax in itself is not illegal, the way the companies went about it breaks the cartels law," said Mona El-Garf head of the ECA, in the statement.

In March 2012, the mobile operators agreed to levy a stamp duty of LE0.5 per month per customer, ahead of notifying the National Telecommunications Regulatory Authority (NTRA).

The operators claim that though they had hitherto borne the burden of the tax on behalf of their subscribers, the current economic situation obliged them to charge their customers.

The simultaneous imposition of the stamp duty by all three companies on pre-paid subscribers at the exact same rate is a violation of Article 6 of the Egyptian Antitrust Code, according to the authority.

Mobinil is majority-owned by France’s Orange SA, which owns 93.92 percent of the shares. The British multinational Vodafone Group owns 55 percent of its Egypt subsidiary. Etisalat Misr is 66 percent owned by United Arab Emirates-based Etisalat Group.

Source: http://english.ahram.org.eg/News/88604.aspx

[Hafiz]

Impressive that the regulator would take on these corporate and political heavy weights. Hope she keeps her job. Also prompt given offenses were committed in March 2012.

Prompt, efficient, enforcing the law and unafraid of the powerful where will she end up?

Given the companies raised the rate by the same amount and at the same time they must have thought they didn't need to take even the most basic ruses to hide from the law. I wonder whether these companies behave in a similar brazen way in other areas where it is unlikely they will be caught

To extort customers is one thing but to do it in public, in concert with all your friends, absolutely confident you can get away with it is another thing.

[Dusak]

I can understand the need for these high profit margins as to maintain a really crap service here in Egypt is expensive.

[Hafiz]

The prosecution isn't about their profits or changes in their rates its about their conspiracy to work together to raise rates in concert to reduce the possibility of one of them keeping rates below its competitors to gain market share. Left to themselves they would conspire to set rates to maximize profits with no regard to customers and their signal problems. Acting together they could all deliver the same crap service knowing that customers would not move if all delivered the same.

Its legal to set whatever rate you want to but you can't secretly 'fix' the rates for all customers.

Competition laws promote price competition and therefore consumer choice by prohibiting the type of behavior in this case. Companies competing between themselves for market share with prices attractive to customers is what capitalism is meant to be about. Acting together to reduce price competition isn't competition, its fleecing the customers to produce an unearned profit.

Dusak, getting a quality service is more likely in a competitive rather than in a rigged market. This prosecution, rather than higher telecoms profits, is more likely to get you the reception you want.

Whatever the motive and success of the case its a rare positive sign of holding power to account and stop them fleecing the punters.

[Dusak]

Yes, I understand all that and what the meaning of the report was. But I will utilize every opportunity offered to have a dig at the providers here as the service is abysmal most of the time. And all we can do is sit back and except it.