The UAE announces a new competition law prohibiting firms from offering ‘very low’ prices. The new law prohibits companies from offering or applying very low prices for production, transfer, and marketing with a monopolistic approach to drive other companies out of competition.
The newly enacted legislation stipulates that competition shall be construed as the undertaking of economic activities in accordance with market principles, provided these mechanisms do not adversely affect trade, development, or consumer interests. The objective of this law is to promote equitable competition and to prevent monopolistic practices among all enterprises, while simultaneously safeguarding consumer rights within the nation. Furthermore, the law will govern mergers and acquisitions within the domestic market.
The ministry will monitor and communicate with local authorities regarding inspections to ensure fair competitive practices in the country. The authority can also take action upon receiving a complaint.
This was announced during a media briefing where 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 affecting consumers in the UAE, were revealed.
The fines and penalties for companies are under review and will be released once approved by the Cabinet.
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, contributing to enhanced effectiveness, competitiveness, and protection of 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 in the context of the operationalization of new market mechanisms, the promotion of economic efficiency, marketing, and R&D are also key goals,” he added.
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 the ownership or usufruct rights of property, rights, equity, shares, or obligations of an establishment to another, empowering the establishment or a 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.
To successfully complete the process of economic concentration, two conditions must be met. The first condition specifies that the total annual sales value of these establishments in the relevant market for the last fiscal year must exceed an amount set by the Cabinet based on the minister’s proposal. The second condition requires that the total market share of these establishments surpasses a certain percentage of total transactions in the relevant market during the last fiscal year, as determined by the Cabinet. The Executive Regulation of this law provides the guidelines for submitting the economic concentration application, the necessary documentation, and the mechanisms for its review.
The ministry has announced that companies are invited to submit their feedback on the Application for Economic Concentration project and share any data or information that could facilitate the evaluation of the request, in accordance with international best practices in competition.
Furthermore, the ministry detailed that current efforts are focused on developing a more agile and sustainable competitive system, which includes the introduction of pioneering legislation, initiatives, and programs aimed at establishing the UAE as a global hub for the new economy within the next decade.
The law also delegates new responsibilities to the Competition Regulation Committee, such as proposing general competition protection policies, examining issues related to the implementation of the law’s provisions, and making recommendations.
