UAE announces new competition law prohibiting firms from offering 'very low' prices

The ministry will monitor and communicate with local authorities for inspections to ensure fair and competitive practices in the country

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Published: Thu 11 Jul 2024, 1:38 PM

Last updated: Thu 11 Jul 2024, 8:51 PM

The UAE is prohibiting 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 new law defines competition as the act of conducting economic activities based on market mechanisms, but not such mechanisms that harm trade, development and consumer interests. This was aimed at ensuring fair competition and prohibition of monopolistic approaches for all companies and also protecting consumers’ rights in the country. The law will also regulate mergers and acquisitions (M&As) in the local market.

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The ministry will monitor and communicate with local authorities for inspections to ensure fair competitive practices in the country. The authority can also act in case of receiving a complaint.

This was announced during a media briefing while revealing details of Federal Decree-Law No. 36 of 2023 on competition regulation which promotes and protects competition, combats monopolistic practices, counters harmful economic concentration of consumers in the UAE.

The fines and penalties for the companies are under review and will be released once the Cabinet approves.

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 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… “Ensuring consumer protection from anti-competitive practices in the context of operationalisation of new market mechanisms, the promotion of economic efficiency, marketing and R&D are also key goals,” he added.

Conditions

The new law clarifies that economic concentration (which means the dominance of a small number of firms within a particular industry) 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 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.

Two conditions must be satisfied 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 for submitting the application for economic concentration, the documents to be attached, and its examination mechanisms.

The ministry said that companies can submit their views on the Application for Economic Concentration project and also provide any data or information that would help study the request, in line with global best practices in the field of competition.

The ministry elaborated that efforts are currently underway to develop a more agile and sustainable competitive system, including the launch of more pioneering legislation, initiatives, and programmes to make the UAE a global hub for the new economy within the next decade.

The law assigns new responsibilities to the Competition Regulation Committee as well such as proposing the general policy for protecting competition and scrutinising issues related to the application of the provisions of this law and making recommendations.

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