New Competition Law in UAE targets Firms with ‘very low’ Pricing Practices
The UAE Ministry of Economy has recently reviewed the Federal Decree-Law No. 36 of 2023, targeting the regulation of competition within the country. This legislative initiative is designed to improve economic performance by fostering fair competition, combating monopolistic practices, and preventing harmful economic concentrations that could negatively impact consumer interests. The law aims to increase productivity and boost the UAE’s attractiveness to both domestic and foreign investors.
Competition is defined as the conduct of economic activities based on market mechanisms without influencing or restricting these mechanisms in ways that could harm trade, development, and consumer interests. It clarifies that economic concentration involves the complete or partial transfer (merger or acquisition) of ownership or usufruct rights of property, rights, equity, shares, or obligations of an establishment to another, enabling one establishment or a group of establishments to directly or indirectly control another establishment or group of establishments. Abdullah Ahmed Al Saleh, the Undersecretary of the Ministry of Economy, emphasized the significance of this law as a crucial advancement in the UAE’s legislative framework, aligning with international best practices. He noted that the law offers a comprehensive legal structure to support national economic growth and enhance the business environment.
The legislation specifies conditions for completing economic concentration operations that could affect market competition, particularly those that create or strengthen a dominant position. The executive regulation of this law establishes the procedures for submitting the application, the required documents, and the mechanisms for examining the application. Contact us to know more.
Development Process and Goals
The preparation of the legislation involved coordinated efforts at national levels, with the Ministry of Economy adopting a proactive and flexible approach. This process included cooperation with 14 federal and local government entities, and consultations with international reports and studies on competition. The objective was to craft a modern and comprehensive legal framework that enhances competitiveness.
Key goals of the law include ensuring consumer protection from anti-competitive practices, promoting economic efficiency, and fostering research and development. The legislation aims to create a stimulating environment for enterprises, enhancing their competitiveness and effectiveness while safeguarding consumer interests.
Key Provisions of the New Legislation
The new competition law introduces several critical measures:
Regulating Competition and Markets: Establishes a new dynamic for regulating competition as a catalyst for investment and business operations and; aligns with international market standards, particularly in digital markets, ensuring a regulatory framework that protects both companies and consumers.
Prohibiting Unfair Pricing Practices: Bans the application of very low prices aimed at excluding competitors from the market and implements controls to prevent the abuse of economic dependency, prohibiting unjustified actions by enterprises.
Economic Concentration Controls: Covers all economic concentration processes, introducing flexible criteria for verifying these processes based on annual sales values rather than total market shares.
Public Consultation and Data Provision: Allows relevant parties to express views on economic concentration applications and provide data for consideration, aligning with global best practices; encourages companies to actively engage and submit data in the application for economic concentration initiative by improving the regulatory system by providing input.
Integration of Federal and Local Authorities: Enhances the roles of federal and local authorities in enforcing competition law and addressing anti-competitive practices.
Collaboration Among Regulatory Entities: Promotes consultation and collaboration among various federal, local, and sectoral regulatory bodies to enforce competition policy effectively.
Enforcement and Responsibilities
The Ministry of Economy implements competition policies in cooperation with federal and local agencies. This involves tracking notifications and complaints, gathering data, and investigating anti-competitive actions. The Competition Regulation Committee must now propose broad competition policies, examine the law’s application concerns, and suggest protective measures. Penalties for companies that contravene the law are currently being reviewed and will be implemented upon Cabinet approval. The objective is to create a strong framework that can be used to prevent unjust practices and enforce compliance. The Cabinet is responsible for the ultimate ratification of penalties and sanctions. Upon approval, these measures will act as a robust deterrent against violations and guarantee that companies comply with the new competition guidelines.
Prospects Ahead
The new law is a part of the UAE’s overarching initiative to establish a sustainable and competitive economic system, which is consistent with the “We the UAE 2031” vision. The Ministry of Economy is committed to the development of a market that is fair, equitable, and efficient. Its objective is to cultivate competition between the private sector and consumers in order to guarantee the long-term growth and stability of the national economy. The UAE aims to enhance its global economic competitiveness by enhancing its legislative framework, which will attract additional investments and cultivate a robust economic environment. This dedication is a testament to the UAE’s devotion to consumer rights and equitable competition, which is bolstered by initiatives that are designed to position the nation as a global leader in the new economy within the next decade.
