30 Jul 2024
As part of a promising endeavor aimed at bolstering competition and economic vitality in the UAE, the Federal Decree-Law No. 36 of 2023 on competition regulation was recently renewed by the Ministry of Economy. This initiative, introduced during a recent media briefing by Mr. Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy, is a testament to UAE’s continuous commitment towards fostering a fair and dynamic marketing environment, dealing with monopolistic practices, enhancing economic diversification, and strengthening consumer protection.
Objectives of the Competition Law
The reviewed Federal Decree-Law No. 36 of 2023 on competition regulation will serve a range of objectives, including:
- Fostering and Safeguarding of Competition in the Country
- Prevention of monopolistic practices
- Prevention & combating harmful economic concentration of consumers
- Safeguarding consumer interests
- Providing enhanced consumer freedom
- The development of economic sectors and increased productivity
Definition of Competition
Competition, according to the new law, is defined as the act of conducting economic activities based on market mechanisms in a way that does not affect or restrict such market mechanisms, which could potentially undermine trade, development, and consumer interests.
Overview of the New Competition Regulation Act: Key Provisions
- Prohibition of firms from offering services at very low prices:
In a monopolistic market structure, firms often offer very low prices in order to exclude competitors. The new UAE competitive law prohibits this practice of offering very low prices for production, transfer, and marketing wherein this low price is offered to exclude an enterprise or remove competition. This law prevents predatory pricing that can distort market conditions.
- Monitoring Economic Concentration
Economic Concentration, as defined in the competition law, refers to “any act resulting in the complete or partial transfer of the ownership or usufruct rights of property, rights, equity, shares, or obligations of one establishment to another.”
The new legislation
According to the legislation, two conditions are needed to complete the economic concentration process. These are:
- The total value of annual sales for the last fiscal year of such establishments must exceed the amount determined by the Cabinet based on the Minister’s proposal.
- The total share of the establishment in the last fiscal year must exceed the percentage of total transactions in the relevant market as determined by the Cabinet.
- Preventing the abuse of economic dependency
The legislation promotes implementing internal controls that prevent the abuse of economic dependency, prohibiting enterprises from conducting unjustified actions or actions leading to the abuse of economic dependency.
- Supporting the growth of digital markets
This legislation also significantly strives to regulate the competition in the country for both physical and virtual markets. Considering the growth of digital markets and their significant area of competition, this law ensures that these digital businesses are subjected to fair competition as offline businesses in order to protect the interests of companies and consumers.
- Inclusion & empowerment of local authorities:
The new competition law aims to empower local authorities by enforcing competition law through their roles and recognizing their part in addressing anti-competitive practices and applications of economic concentration. The law thereby supports the integration between federal and local government by enabling the inclusion of local authorities.
The Role of the Ministry of Economy
The media briefing also shed light on the powers and responsibilities of the Ministry of Economy under the new competition law. These powers and responsibilities include:
- Coordination with relevant authorities and collaboration with federal and local entities in the country
- Prepare a registry of notices and complaints and collect information.
- Envestigation of anti-competitive practices by taking initiative or based on complaints.
- Fostering cross-government collaboration
Impact of UAE’s Competitive Law
The UAE’s strategic vision and forward-looking approach in introducing the new competitive law will strengthen its robust regulatory framework and support sustainable economic growth. Moreover, this law will fortify UAE’s position as an attractive business destination for domestic and foreign investments. By introducing initiatives to curb monopolistic practices, emphasizing consumer protection, monitor economic concentration, and enhance competition, this new legislation will lead to a fair and dynamic market environment
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