The new UAE Competition Law, Federal Law No. 4 of 2012 (the “Competition Law”), came into force on February 23, 2013. The new Competition Law expands on existing competition legislation and adds significant new concepts to competition law in the UAE.
The UAE Ministry of Economy (“MOE”), along with newly created committees, oversee the implementation and regulation of the Competition Law, which covers three areas of competition: merger control, restrictive agreements, and dominant positions. Businesses engaging in a merger or acquisition are required to seek approval from the MOE at least 30 days in advance of the transaction. To grant approval, the MOE must determine whether or not the transaction will negatively impact competition or whether the positive impacts outweigh any negative impacts on competition. The Competition Law also prohibits restrictive agreements that limit or prevent competition. Some examples of prohibited restrictive agreements include those with the objective of fixing prices, dividing markets, determining conditions for sale or supply of services, and precluding entry into a market. Lastly, the Competition Law prohibits businesses from abusing their dominant position within a market by preventing or limiting competition. Penalties for violating the Competition Law range from AED500,000 to AED5,000,000 (US$136,000 to US$1,360,000) with fines doubling for repeat offenders. In some instances, the government will impose a fine between 2% to 5% of the violating firm’s total annual sales revenue.
There are aspects of the Competition Law that have not yet been tested in practice and areas that require further detail; however, the Competition Law will have significant consequences for entities engaging in activities that impact competition.
This article is part of BrandWrites - December 2014