The recently enacted Competition Law No. 36 of 2023 represents more than a mere amendment; it constitutes a comprehensive overhaul and reenactment of the 2012 law.
The competition laws and regulations in the UAE are designed to encourage and protect competition while curbing anticompetitive practices. They work towards limiting restrictive business behaviours and ensuring fair and competitive pricing within the UAE market.
The regulatory framework for competition in the UAE includes:
- Federal Law No. 4 of 2012, known as the “Competition Law,” serves as the primary legislation governing competition in the UAE.
- Executive Regulation No. 37 of 2014 acts as the implementing regulations for the Competition Law.
- Cabinet Resolutions No. 13 of 2016 and No. 22 of 2016 play a crucial role in clarifying key aspects of the Competition Law, including relevant market share thresholds.
The oversight of the UAE competition regime falls under the purview of the Department of Competition at the Ministry of Economy (MOE). The principal regulators responsible for implementing the Competition Law include the Competition Regulation Committee, chaired by the Deputy Minister of Economy. Their role is pivotal in ensuring the effective enforcement and application of competition regulations in the UAE.
This Decree-Law is applicable to all businesses engaging in economic activities within the State, including the exploitation of intellectual property rights both within and outside the State. It also extends to economic activities conducted outside the State that have an impact on competition within the State.
Additionally, businesses owned by the Federal Government, as determined by a Cabinet resolution with the Minister’s proposal and coordination with the Relevant Authority, fall under the scope of this law. The same applies to businesses owned by an emirate government, operating within that emirate, as specified by a resolution from the local government.
Scope of the Competition Law
The scope of the Competition Law in the UAE encompasses businesses with a physical presence or operations within the country, including foreign entities that impact the local competitive landscape through direct or indirect business activities. Notably, the law excludes federal and local government entities, government-controlled entities (with government ownership of 50% or more), and small and medium-sized enterprises (SMEs).
Cabinet Resolution No. 22 of 2016 defines SMEs as enterprises with up to 200 employees (in the trading and services sectors) and 250 employees (in the industrial sector), with an annual turnover not exceeding AED 250 million (in the industrial and trading sectors) and AED 200 million (in the services sector). Turnover is calculated based on the entire group of companies, not just the specific establishment involved in the transaction.
Furthermore, certain sectors are exempt from the provisions of the Competition Law, including telecommunications, financial services, cultural activities (readable, audio, and visual), pharmaceuticals, utilities, waste disposal, transportation, oil and gas, and postal services.
Competition Restriction Provisions
This law prohibits agreements between businesses that distort, diminish, or restrict competition. Such agreements may involve setting prices, determining sales conditions, engaging in collusive bidding, limiting production or economic activities, colluding to refuse purchases or sales, and impeding the free flow of goods and services in specific markets.
Additionally, agreements that aim to share markets, segment customers based on various criteria, or obstruct the entry of businesses into the market are also prohibited. These restrictions apply, with exceptions outlined in Federal-Decree Law No. (3) of 2022 on Commercial Agencies or any subsequent legislation.
Undertakings can enter agreements for economic development, but these must not overly restrict competition. The Ministry must be notified with required documents. Exemptions are granted by the Minister based on committee recommendations. Amendments to granted exemptions must be reported within 30 days, following rules specified in the Executive Regulations.
Establishment and Oversight of the Competition Regulatory Committee
This Decree-Law establishes a committee named the “Competition Regulatory Committee,” reporting to the Minister. The Cabinet, based on the Minister’s proposal, will determine the committee’s formation and procedural rules through a resolution.
Role and Authority of the Competition Regulatory Committee
The Competition Regulatory Committee holds the authority to suggest the overall policy for safeguarding competition in the State, submitting recommendations to the Minister for necessary actions. It is responsible for scrutinizing issues related to the application of this Decree-Law and providing recommendations to the Minister.
Additionally, the committee proposes legislation and procedures for competition protection, advises the Minister on practices eligible for exemption, prepares an annual report on its activities, and handles other competition-related matters entrusted by the Minister, Federal Authorities, or Relevant Authorities in the State.
Penalties for Violation:
The Cabinet will issue a resolution outlining the administrative penalties applicable to undertakings for violations of the provisions in this Decree-Law, its Executive Regulations, or related implementation resolutions.
Penalties
Violations of specified provisions will result in fines for the undertaking. The fine will be either a minimum of AED 100,000 or 10% of the violating undertaking’s annual total sales in the State during the last fiscal year, whichever is higher. If the annual total sales cannot be determined, the penalty will range from AED 500,000 to AED 5,000,000.
Complaint for Violations of Decree-Law Stipulations
Any concerned party has the authority to lodge a complaint with either the Ministry or the Relevant Authority concerning any infringement of the stipulations outlined in this Decree-Law. This process should adhere to the guidelines established in the Executive Regulations of this Decree-Law and the resolutions enacted for its effective implementation.
This Decree-Law will be officially published in the Official Gazette and will become effective three (3) months from the date of its publication.
This article, along with any accompanying commentary, should not be considered legal advice. It is presented purely for informational purposes without taking into account any particular objectives, circumstances, or facts. The content reflects the author’s opinions at the time of writing, which may change over time due to varying objectives, circumstances, or facts. Individual perspectives may differ among colleagues or the firm. It is advisable to seek legal advice for each specific matter from the law firm qualified to practice in that particular jurisdiction.