UAE’s Competition Regulation: A Comprehensive Analysis of Federal Law No. 36/2023

Posted by Awatif Mohammad Shoqi Advocates & Legal Consultancy on March 12th, 2024

Introduction:

In a significant step, Federal Decree-Law No. 36/2023 has assumed control, replacing the previous competition regulation law (Federal Law No. 4/2012) in the UAE. This new legislation represents a remarkable development, focusing on competition practices and countering commercial monopolies.

The law aims to encourage fairness, competitiveness, and consumer protection through provisions, controls, and penalties designed to restrict anti-competitive behaviours and establish regulatory frameworks.

Key Definition within Federal Law No. 36/2023:

According to Article 1 of the Federal Decree-Law No. 36/2023 describe the key definitions

  • Competition: Engaging in economic activities within market mechanisms without adverse influence or restrictions detrimental to trade, development, or consumer interests.
  • The Relevant Market: Encompassing interchangeable products or services meeting specific consumer needs based on price, characteristics, and uses, within a specific geographical location.
  • Establishment: Any entity involved in Economic Activity, regardless of legal form, including main offices, branches, or associated individuals or groups.
  • Agreements: Any cooperation, written or verbal, explicit or implicit, between two or more Establishments.
  • Dominant Position: An Establishment with the capability to control and influence activities within a Relevant Market.
  • Economic Concentration: Actions resulting in the transfer of ownership or usufruct rights, granting control over another Establishment or a group.

Regulation of Competition (Article 2):

The objective is to create a competitive business environment, prevent monopolistic practices, and enhance effectiveness and consumer welfare for Establishments.

  • Emphasis on economic freedom, prohibiting anti-competitive agreements, and preventing abuse of dominant positions.
  • Close monitoring of Economic Concentration processes.
  • Applicability to all Establishments engaged in Economic Activities within or outside the UAE, including intellectual property rights

Regulating Fair Competition (Articles 6-8):

  • Comprehensive framework targeting abuse of dominant positions, unfair pricing conditions, discrimination, and excessive control over production.
  • Addresses exploitation of economic dependency, promoting fair dealings.
  • Proactive stands against offering goods or services at unreasonably low prices to prevent exclusionary practices and unethical pricing strategies.

Exemptions and Economic Concentration (Articles 9-15):

  • Detailed exemptions balancing economic development with fair competition.
  • Article 11 allows exemptions for specific contract categories required for economic growth.
  • Clear conditions for economic awareness operations and regulatory oversight outlined in Articles 13 and 14.

Regulatory Framework and Competencies (Articles 16 to 19):

  • Establishment of the Regulatory Committee with outlined competencies.
  • The Competition Regulatory Committee reports to the Minister, proposing competition protection policies and offering recommendations on exempting certain practices.
  • The Ministry is authorized to implement competition policy, coordinate with authorities, investigate anti-competitive practices, and issue complete reports on competition.

Seeking Technical Opinion:

Article 20 authorizes the Ministry to seek technical opinions from Concerned Authorities and Sectoral Regulatory Bodies based on complaints or automatic investigations and exemption applications or Economic Concentration operations.

The Concerned Authority or Sectoral Regulatory Bodies may provide their views within 1 month from the date of receiving the technical opinion request.

Administrative Penalties:

The Council of Ministers is authorized to issue decisions regarding administrative penalties that may be imposed on Establishments for violations as per the Articles 24-29

  • Fines may range from AED 100,000 to 10% of annual total sales.
  • In cases of determining total sales challenges, fines between AED 500,000 and AED 5,000,000 may be imposed.
  • Closure of an establishment for a period not exceeding 6 months.
  • The judiciary may issue decisions to stop or prevent actions until a final decision.

Structured Framework for Violations:

Federal Law No. 36/2023 establishes a structured framework for addressing violations through clear and accessible procedures.

  • Interested parties may granted the right to file complaints with the Ministry or the Concerned Authority.
  • In specific instances, criminal proceedings may be initiated with a required written request from the Minister.
  • There is an opportunity to file a written grievance within 15 working days from the date of notification and may file an appeal in case of rejection.

Conclusion:

Federal Law No. 36/2023 in the UAE represents a comprehensive and robust legal framework aimed at fostering fair competition, preventing monopolistic practices, and protecting consumer welfare.




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Awatif Mohammad Shoqi Advocates & Legal Consultancy

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Awatif Mohammad Shoqi Advocates & Legal Consultancy
Joined: February 3rd, 2021
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