New law to combat monopolistic practices by ensuring a stimulating environment for enterprises

Abu Dhabi, 11 July 2024:

The Ministry of Economy organized a media briefing to review the Federal Decree-Law No. 36 of 2023 on competition regulation, which aims to promote and protect competition in the country, combat monopolistic practices, counter harmful economic concentration of consumers, support the growth of economic sectors and boost productivity, thus enhancing the country's attractiveness to domestic and foreign investments.

H.E. Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said: 'The law marks a new milestone in the UAE’s efforts to develop a leading legislative system for competition in accordance with global best practices. It provides a comprehensive legal framework to enhance the role of competition in the growth of the national economy and the business environment in the country.'

He added: 'The preparation phase of this legislation saw concerted national efforts. The Ministry of Economy followed a proactive, flexible and forward-looking approach in its development in cooperation and coordination with 14 federal and local government entities in the country, in addition to drawing on international reports and studies specialized in competition. This was to ensure the development of a modern, comprehensive legislation that supports the country's efforts to introduce a new framework for competition and create an enabling environment for enhanced competitiveness. Ensuring consumer protection from anti-competitive practices in the context of operationalization of new market mechanisms, the promotion of economic efficiency, marketing and R&D are also key goals.”

He continued: 'The new law aims to combat monopolistic practices by ensuring a stimulating environment for enterprises, contributing to 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.'

The Ministry reviewed the highlights of the new Competition Regulation Act in detail and its role in promoting competition and providing greater consumer freedom while purchasing commodities and encouraging investors and companies in various economic activities to engage in fair competition. The new legislation

• Establishes a new dynamic in regulating competition in the country as a catalyst for investment and doing business. The law also contributes to the regulation of the markets – both physical and virtual - in line with the growth in the volume of trade through modern technical means in the country. It is aligned with the dimensions of the relevant international markets, especially since digital markets constitute a significant area of competition that requires a clear regulatory framework that ensures the interests of companies and consumers.
• Introduces controls to prevent the abuse of the economic dependency situation so that any enterprise is prohibited from conducting unjustified actions or actions leading to the abuse of the economic dependency situation.
• Prohibits the offer or application of very low prices for production, transfer and marketing when the purpose or consequence of this practice is to exclude an enterprise or one of its products from the market concerned.
• Covers all economic concentration processes, conditions and control mechanisms, as well as introduces flexibility in established criteria in the verification of the economic concentration process, based on the annual sales value of the enterprises concerned and not only the total share of such enterprises involved in the economic concentration process.
• Enables relevant parties to express their views on the Application for Economic Concentration project, and to provide any data or information that would help study the request, in line with global best practices in the field of competition.
• Supports the integration between the federal and local government in enforcing competition law through the empowerment of local authorities by enhancing their roles for the first time in addressing anti-competitive practices and applications for economic concentration across the country.
• Promotes consultation and collaboration among various federal, local, and sectoral regulatory entities across different issues governed by the law, actively enforcing competition policy at the national level.

Furthermore, the briefing session focused on the powers and responsibilities assigned to the Ministry of Economy under the new Law. These include the implementation of the competition policies in collaboration with federal and local entities in the country and coordinating with relevant authorities to combat any form of activities or practices in breach of the provisions of the law. Other responsibilities include the preparation of a registry of notices and complaints, information collection, and investigation of anti-competitive practices based on complaints or on its own initiative, thus addressing such practices in cooperation with relevant authorities and providing recommendations to the Minister of Economy on decisions to be taken in this regard.

The Ministry reiterated its unwavering commitment to working alongside its partners from both the public and private sectors to achieve these goals. Its primary objective is to foster a competitive market in the UAE that is built upon principles of fairness, equality, and efficiency. These include the expansion of activities across various economic sectors in order to improve the overall business environment within the country. Moreover, the Ministry aims to raise awareness on the significance of cultivating a culture of competition among consumers and private sector, ensuring the sustainability and growth of the national economy for the next 50 years. Furthermore, it highlighted that the new Law will enhance the UAE's position in numerous global economic competitiveness indicators. National efforts are currently underway to develop a more agile and sustainable competitive system, including the launch of more pioneering legislation, initiatives, and programs, to be implemented with the ultimate objective of establishing the UAE a global hub for the new economy within the next decade, in line with the objectives outlined in the 'We the UAE 2031' vision.

Competition and Economic Concentration

The new law defines competition as the act of conducting economic activities based on market mechanisms without affecting or restricting such mechanisms, which could harm trade, development, and consumer interests. The law clarifies that economic concentration is any act resulting in 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 specifies a set of conditions to complete economic concentration operations that would affect the level of competition in the relevant market, and in particular create or strengthen a dominant position. The relevant establishments are required to submit an application on the form designated for this purpose to the Ministry of Economy at least 90 days prior to the completion thereof and shall attach the required documents.

Pursuant to the new law, there are two conditions that must be satisfied in order 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 of submitting the application for economic concentration, the documents to be attached, and its examination mechanisms.

Responsibilities of Competition Regulation Committee

The law assigns new responsibilities to the Competition Regulation Committee as well. These include proposing the general policy for protecting competition in the country and presenting it to the Minister to take necessary actions. The Committee is also responsible for scrutinizing issues related to the application of the provisions of this law and making recommendations thereon to the Minister. Additionally, it will propose legislation and measures for protecting competition in the UAE.