العربية
Русский
اردو
中文
Français
UAE Competition Law: Monopoly, Penalties, and Market Protection
Competition Law in the UAE
Prohibited practices, penalties, and corporate rights
Federal Decree-Law No. (36) of 2023 regarding competition regulation has been issued to replace Federal Law No. (4) of 2012. It enhances the protection of the business environment and combats monopoly and abuse of dominant positions. It applies to all entities engaging in economic activities within the country, including activities conducted outside the country that affect competition within it.
In this article, our team reviews the key provisions of this law.
First: Agreements Restricting Competition
The law prohibits agreements between entities that have the subject or effect of disrupting, limiting, or preventing competition, particularly including:
- Directly or indirectly setting selling or purchasing prices.
- Collusion in bids, tenders, and auctions.
- Freezing production, distribution, or marketing, or limiting them.
- Colluding to refuse to purchase from a specific entity or to sell to it.
- Market sharing or customer allocation based on geographical or temporal criteria.
- Taking actions to obstruct the entry of entities into the market or to exclude them.
Second: Abuse of Dominant Position
The law prohibits any entity with a dominant position in the market from taking actions that lead to the abuse of that position, including:
- Imposing resale prices directly or indirectly.
- Selling at prices below actual cost with the intent to eliminate competitors.
- Unjustified discrimination between customers in prices or terms.
- Forcing a customer not to deal with a competing entity.
- Publishing false information about products or their prices.
- Obstructing other entities' access to physical or digital networks or infrastructure.
Third: Abuse of economic dependence
The law also prohibits exploiting the economic dependence of clients who have no alternatives for marketing or supply, including imposing resale conditions, price discrimination, forcing the client not to deal with competitors, and unjustified refusal to transact under customary commercial terms.
Fourth: Economic concentration (mergers and acquisitions)
Article (12) of the law requires obtaining the approval of the Ministry of Economy before completing any economic concentration operation (merger or acquisition) that may affect competition, in two cases:
- The total annual sales of the concerned entities exceed the limit determined by the Cabinet.
- The total market share of the entities exceeds the percentage determined by the Cabinet in the relevant market.
| Application stage | Duration |
|---|---|
| Submit the application before completing the operation | At least 90 days |
| Decision on the application by the minister | 90 days, extendable for 45 days |
| Submitting voluntary commitments to mitigate negative effects | Within 30 days of completing the application |
Failure to issue a decision by the minister within the specified period is considered a rejection of the concentration operation. The minister may approve unconditionally or conditionally with obligations or reject.
Fifth: Available exemptions
The law allows exemptions from certain provisions if the entities prove that the agreement or practice is necessary to promote economic development, improve competitiveness, develop production, or achieve benefits for consumers, under two conditions:
- That it does not impose restrictions beyond what is necessary to achieve the objective.
- That it does not lead to the complete exclusion of competition in the relevant market or a significant part of it.
The exemption request is submitted to the Ministry of Economy along with the required documents, and it will be decided within 90 days, extendable for 45 days. Failure to respond is considered a rejection of the request.
Sixth: Fines and Penalties
| Violation | Fine |
|---|---|
| Violation of the provisions of restrictive agreements, dominant position, economic dependence, or predatory pricing | Not less than 100,000 dirhams and not exceeding 10% of the total sales of the establishment during the last financial year |
| For the same violation if sales cannot be determined | From 500,000 to 5,000,000 dirhams |
| Violation of economic concentration requirements | From 2% to 10% of total sales, or from 500,000 to 5,000,000 dirhams |
| Completing the concentration process without waiting for the decision | From 50,000 to 500,000 dirhams |
| Obstructing ministry employees or withholding information | From 50,000 to 500,000 dirhams |
| Disclosing confidential information by ministry employees | From 50,000 to 200,000 dirhams |
Seventh: Filing Complaints and Appeals
Any interested party may file a complaint with the Ministry of Economy or the relevant authority. Complaints shall be extinguished after 5 years from the date of the violation, except for ongoing practices whose effects extend beyond five years.
Any interested party may appeal in writing against any decision issued within 15 working days from the date of notification, and the appeal shall be decided within 30 days. A rejection decision may be challenged before the competent court within 30 days.
Frequently Asked Questions
Does the competition law apply to government companies?
The law does not apply to establishments owned by the federal government, which are specified by a decision from the Council of Ministers, as well as establishments owned by the emirate governments that operate within the emirate. However, commercial government establishments not covered by the exemption decision are subject to the law.
What is the difference between anti-competitive agreements and a dominant position?
An anti-competitive agreement is a coordination between two or more establishments aimed at disrupting competition, such as colluding on prices or dividing markets. A dominant position, on the other hand, is a situation where a single establishment or a group of establishments controls the market and exploits this control against competitors or consumers.
Is it permissible to merge with a competing company in the UAE?
Yes, however, a request must be submitted to the Ministry of Economy at least 90 days before completing the transaction if it meets the stipulated sales limits or market share. The merger cannot proceed until approval is granted or the period expires.
Is selling at very low prices considered a violation of competition law?
Yes, if the aim is to exclude a competitor from the market or prevent their entry. Exceptions include general discounts organized under consumer protection law and the liquidation of commercial establishments.
What is meant by collusion in bidding and what is its penalty?
It is a secret agreement between competing establishments to determine the winner of the bid or coordinate the submitted offers. It is considered one of the most severe violations, with fines reaching 10% of the total sales of the establishment, in addition to the possibility of its closure.
Can two companies cooperate in a joint project without violating competition law?
Yes, if the cooperation aims to enhance economic development or improve competitiveness or achieve benefits for the consumer, and the ministry is notified and the necessary exemption is granted. The exemption is not automatic but requires prior notification and obtaining a decision.
Do the provisions of the law apply to digital activities and electronic platforms?
Yes, the law explicitly applies to digital infrastructure and electronic networks, and it prohibits an entity with a dominant position from obstructing other entities' access to it if it is the only possible solution for conducting economic activity.
What is the statute of limitations for competition complaints?
Complaints expire after 5 years from the date of the violation, except for practices whose effects extend beyond that.
Can there be a settlement in competition cases?
Yes, the minister or his delegate may settle before referring the criminal case to trial, for an amount not less than double the minimum prescribed fine.
Summary
- The law prohibits agreements between entities that restrict competition and harm consumers.
- Abuse of a dominant position or economic dependency is explicitly prohibited.
- Mergers and acquisitions that affect competition require prior approval.
- Fines can reach up to 10% of total annual sales or 5 million dirhams.
- The harmed party has the right to file a civil lawsuit for compensation regardless of the criminal penalty.
If your entity is facing an investigation or complaint related to competition, or needs to review its commercial agreements or merger and acquisition deals in light of this law, our office team is fully prepared to provide the necessary legal advice.