DNE has learned that Japan Tobacco International (JTI) has filed a complaint to the Egyptian Competition Authority (ECA) alleging that the Eastern Company, the largest cigarette producer in Egypt, has a monopoly in the cigarette market.
A senior source said that the complaint concerns JTI’s Gold Coast brand, which competes with the low-priced cigarettes that the Eastern Company offers in the Egyptian market.
The source added that JTI used to manufacture this brand in its factories in Turkey and import and sell it in Egypt. However, the recent tax amendments that imposed a value-added tax on low-priced cigarettes prevented JTI from importing this brand and limited its sale to local production.
The source said that JTI is now trying to produce this brand at the Eastern Company, which has a monopoly on the cigarette industry, and include it in the contract between the two parties, which will expire in mid-2024. However, the two parties have not yet reached a final agreement, and JTI has stopped selling its Gold Coast brand until the negotiations with the Eastern Company are completed.
On 14 November, sources told DNE that one of the foreign companies that has a low-priced cigarette brand objected to the tax amendments that banned the import of such cigarettes and restricted them to local production. ECA is investigating the complaint it received regarding the competition in the cigarette market.
A high-ranking official at the ECA told DNE at that time that the agency had received a complaint in this regard, but did not reveal more details.
The cigarette market in Egypt has witnessed several controversial events in the past year. This includes the issuance of a new license after decades of the Eastern Company being the sole government-owned producer and the sale of 30% of the Eastern Company to the Global Investment Holding Company for $625m.
The tax amendments also allowed the cigarette companies to increase the prices of their products after the crisis that hit the cigarette market in Egypt, amid a shortage in supply and a surge in prices, creating a black market for cigarettes. The amendments also expanded the taxed price segments of cigarettes by raising the minimum and maximum limits of the pack price by 12% annually for five years.