UAE: New Competition Law to Prohibit Companies from Monopolistic Pricing Practices

The UAE is prohibiting companies from offering or applying very low prices for production, transfer and marketing in a monopolistic manner to drive other companies out of competition.

The new law defines competition as the act of conducting economic activities based on market mechanisms that do not harm trade, development, or consumer interests.

This aims to ensure fair competition, prohibit monopolistic practices among all companies and protect consumer rights in the country. The law will also regulate mergers and acquisitions (M&As) in the local market.

The Ministry of Economy will monitor and coordinate with local authorities for inspections to ensure fair competitive practices in the country. The authority can also act upon receiving a complaint.

This was announced during a media briefing, revealing details of Federal Decree-Law No. 36 of 2023 on competition regulation, which promotes and protects competition, combats monopolistic practices and counters harmful economic concentration in the UAE.

The fines and penalties for companies are under review and will be released once the Cabinet approves them.

Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said the new law aims to combat monopolistic practices by ensuring a stimulating environment for enterprises, enhancing effectiveness, competitiveness and protecting consumer interests.

“It also promotes the market economy and economic activities in line with the principle of economic freedom and ensures that economic concentration is monitored. Its articles address all conditions that may undermine, limit, prevent, or restrict competition...

Ensuring consumer protection from anti-competitive practices, promoting economic efficiency, marketing, and R&D are also key goals,” he added.

Conditions

The new law clarifies that economic concentration (which means the dominance of a small number of firms within a particular industry) involves any act resulting in 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, empowering the establishment or group of establishments to directly or indirectly control another establishment or group of establishments.

The law takes into consideration the annual sales value of the enterprises concerned and not only the total share of such enterprises involved in the economic concentration process.
Two conditions must be satisfied to successfully complete the process of economic concentration.

The first condition indicates that the total value of annual sales of such establishments in the relevant market, for the last fiscal year, shall exceed the amount determined by the Cabinet, upon the minister's proposal.

The second condition states that the total share of such establishments shall exceed the percentage of the total transactions in the relevant market during the last fiscal year, as determined by the Cabinet.

The Executive Regulation of this law establishes the controls for submitting the application for economic concentration, the documents to be attached, and its examination mechanisms.

The ministry said that companies can submit their views on the Application for Economic Concentration project and also provide any data or information that would help study the request, in line with global best practices in the field of competition.

The ministry elaborated that efforts are currently underway to develop a more agile and sustainable competitive system, including the launch of more pioneering legislation, initiatives, and programmes to make the UAE a global hub for the new economy within the next decade.

The law assigns new responsibilities to the Competition Regulation Committee, such as proposing the general policy for protecting competition, scrutinising issues related to the application of the provisions of this law, and making recommendations.