Overview of Competition Regulations in the UAE
What is the governing legislation?
The main law governing competition in the UAE is Federal Law No. 4 of 2012 (UAE Competition Law) and its Implementing Regulations No. 37 of 2014 (the Regulations).
General points of concern:
The UAE Competition Law is stated to apply to all economic activities in the UAE and Intellectual Property Rights (IPRs) of entities inside and outside the UAE if their economic activities affect competition in the UAE.
Entities operating in certain sectors are exempted from the application of the UAE Competition Law. Some of these sectors include telecommunication, oil and gas, water and electricity, transport including air, land and sea transport and related services, production and supply of pharmaceutical products, financial services and cultural activities.
Actions of the UAE Government at both Emirate and Federal levels and the actions of enterprises which are initiated pursuant to a delegation or a resolution by the UAE Government are also exempted from the application of the provisions of the UAE Competition Law.
What is regulated?
The UAE Competition Law prohibits “restrictive agreements” between establishments whose subject or objectives are to prejudice, prevent or limit competition, especially certain anti-competitive practices listed under Article 5 of the Competition Law.
The UAE Competition Law also prohibits any establishment with a dominant position in a particular market or in a main and effective part of it from performing any action that leads to the abuse of such position in order to prejudice, prevent or limit competition, especially certain anti-competitive practices listed under Article 6 of the UAE Competition Law. Whether or not an establishment is in a dominant position depends on a percentage of market share to specified by the Cabinet.
The accomplishment of the “economic concentration operations”, wherein the total share of the establishments involved exceed a certain percentage to be specified by the Cabinet of the total transactions which may affect the level of competition in the relevant market, is conditional on the submission of an application to the Ministry of Economy (MOE) 30 days before the accomplishment of such operations.
How to comply with Competition Regulations?
An establishment may apply to the MOE for an exemption from the prohibitions on restrictive agreements and abuse of a dominant position provided that certain conditions and procedural requirements are satisfied. The Minister of Economy (the Minister) will decide on such application within 90 days (which period can be extended for a further 45 days) from the date of receiving the complete and compliant application. The Minister’s approval is implied if such period has lapsed without a decision from the Minister.
The MOE will consider an application to approve the economic concentration operation with reference to certain factors under the Regulations, such as the actual and potential level of competition in the relevant market and the extent of the potential impact on prices. The Minister will decide on the application within 90 days (which period can be extended for a further 45 days) from the date of receiving the complete and compliant application. The Minister’s approval is implied if such period has lapsed without a decision from the Minister.
Any interested party can complain to the MOE against an establishment violating the UAE Competition Law. Unfortunately, there is no definition of who constitutes an interested party. The UAE Competition Law and the Regulations do not include a time limit for complaining of the violation. A timeline for considering and deciding on the complaint is stipulated under the UAE Competition Law and the Regulation.
What are the penalties?
A fine of between AED 500,000 and AED 5,000,000 for violation of the provisions relating to abuse of a dominant position and restrictive agreements.
A fine of between 2% and 5% of the annual total sales of commodities or revenues from services which are the subject of the violation realised by the establishment violating the economic centration provisions in the UAE within the last financial year. If the relevant percentage cannot be calculated, then a fine of between AED 500,000 and AED 5,000,000.