New UAE Competition Law: what’s new?

The UAE has recently issued a new Federal Competition Law (Decree Law. No. 36 of 2023) (New Law), which will repeal and replace the existing Competition Law (Law No. 4 of 2012) (Old Law) from 29 December 2023.

The New Law introduces some significant changes to the UAE competition regime, with implications for businesses operating in the country. Key features of the New Law include:

Expanded scope

The New Law applies to any establishment conducting business in the UAE, as well as any economic activity outside the UAE that affects competition within it. The definition of an establishment now expressly includes branches, while the definition of a relevant market has been expanded to include the digital economy. The New Law also adds two new prohibitions on exploiting economic dependency and predatory pricing, in addition to the existing restrictions on restrictive agreements, abuse of dominance and economic concentrations (merger control).

Narrowed exemptions

The exemptions available under the New Law have been narrowed. The list of exempt sectors (including telecoms, financial services, utilities, and transport) has been removed. Instead, a sectoral exemption will apply only where another regulator has the specific authority by law to regulate anti-competitive practices in the relevant sector. An exemption for government-owned entities has been retained, but such entities are now to be specifically identified by Cabinet decision (at federal level) or by local government (at emirate level). The UAE economy is characterised by significant levels of government ownership, so this will provide helpful clarity in practice. The previous exemptions for “weak impact” restrictive agreements and for small and medium sized enterprises have been removed. Parties may need to revisit their agreements to ensure they remain compliant. Establishments may apply to the Ministry for a specific exemption from the prohibitions on restrictive agreements, abuse of dominance, exploiting economic dependency and predatory pricing. Further detail on the process for applying for an exemption will be set out in the Implementing Regulations.

Revised merger control process

As under the Old Law, prior approval from the Ministry of Economy (Ministry) is required for any proposed economic concentration that may affect competition in a relevant market, especially by creating or enhancing a dominant position. The notification period has been increased from at least 30 days to at least 90 days before concluding the relevant contract and parties will need to plan their transactions accordingly. Two alternative conditions for requiring approval have been introduced, based on the total annual sales value or the total market share of the establishments in the relevant market. The New Law expressly allows the parties to suggest measures to prevent the anti-competitive consequences of their transaction (for example, disposal of a subsidiary, division or business line) and gives the Ministry the power to publish information about proposed transactions on its website and invite comments from interested parties.

Enhanced administration and enforcement

A Competition Regulation Committee will propose general policy on competition, draft legislation and submit recommendations to the Ministry. The New Law also provides for more coordination between the Ministry, sector regulators and other UAE governmental authorities. Where the relevant anti-competitive conduct or economic concentration involves only establishments in a single emirate, and its impact does not extend to any other emirate, applications for exemptions and approvals will now be considered at the local government level. The New Law maintains the penalties for breach of the law, including fines and temporary closure of a business.

The New Law represents a major overhaul of the UAE competition regime, and businesses should be aware of its implications and requirements. The Ministry is expected to issue detailed Implementing Regulations within six months of the effective date, which will provide further guidance and clarity on the application of the New Law in practice.

For more information, please reach out to your usual Clyde & Co contact.