OBG talks to Samy Laghouati, Managing Partner, Gide Loyrette Nouel Algeria

Interview: Samy Laghouati

To what extent has the establishment of the competition council allowed the Algerian government to reinforce its role as strategic regulator?

SAMY LAGHOUATI: The Algerian state has general regulatory powers, in addition to the specific duties entrusted to it by Ordinance No. 03-03 of July 19, 2003 on competition, along with the general regulatory powers of the National Competition Council. The law specifies that the state has the power of specific regulation in that it guides the orientation of the economy via various key themes stipulated in this legislation. In particular, three main aspects may be highlighted through which the government sets out its strategy.

The state has the power to restrain price fixing, particularly when the goods and services in question are strategic. Such a limitation may also be dictated by the state to mitigate serious disturbances in the market. Thus, the government’s power of strategic regulation may be expressed through the merger control exercised by the competition council. Indeed, only the council can authorise mergers after obtaining a decision from the Ministry of Trade. The state could, through this right of oversight, develop an instrument for regulation with a view to indirectly controlling the creation and development of mergers. The state’s power of strategic regulation concerns individual exemptions granted to firms that have entered into agreements that restrict competition, the effects of which are deemed beneficial in that they provide for “economic or technical progress”, “contribute to improving employment”, or “enable small and medium-sized undertakings to consolidate their position in the market”. The council alone has the ability to grant such exemptions, which may correct an imbalance arising out of a strict application of the law.

This rule, like a hidden hand, could constitute a mechanism for government regulation supported by an undercurrent of consideration of public interest. As such, the council could allow the state to reinforce its role as strategic regulator, as well as put its independence with respect to regulatory powers to the test.

How do the Public Procurement Code’s (PPC) new provisions benefit public companies?

LAGHOUATI: The new provisions of the PPC amount to a real improvement for economic public enterprises (EPEs) and should greatly facilitate their activities. Indeed, whatever their method of financing, EPEs now fall outside the regulations on public procurement in terms of the conclusion of their contracts.

The sole obligation for EPEs today is to draw up their own rules for concluding contracts while complying with the general principles governing public procurement regulations, namely transparency, equal treatment and free access to tenders. Such freedom enables them to have their contract processes closely match the requirements of their activity, making them more agile and efficient with respect to their private competitors.

Nevertheless, to date a good number of EPEs content themselves, in the definition of their internal rules, with more or less reproducing the provisions of regulations on public procurement without using the opportunity afforded by this new freedom. This tendency on the part of numerous EPEs also mitigates the improvement that these new provisions represent for foreign undertakings responding to calls for tenders by EPEs.

One telling example of this situation is the presence, in a significant number of specifications, of the investment commitment for foreign bidders, based on Article 24 of the PPC. However, the implementation of this obligation remains uncertain in the absence of any implementing legislation to date. Often EPEs do not know what to tell their foreign bidders concerning the scope and consequences of this commitment. In this context, maintaining such an obligation with such a large number of calls for tenders for EPEs can only give rise to uncertainty and even the discouragement of certain foreign undertakings. More broadly, the inclusion in EPEs’ specifications of clauses that have been directly taken from public procurement regulations is often the source of difficulties in the interpretation and application of such agreements for private contractors.