The United Arab Emirates (UAE) has enacted a significant legislative reform with the introduction of Federal Law No. 36 of 2023, known as the “New Competition Law.” This law, set to come into effect on December 28, 2023, marks a substantial shift in the regulatory landscape, replacing the previous Federal Law No. 4 of 2012. This development heralds a new phase of economic governance under the stewardship of the UAE Ministry of Economy, aiming to create a more robust and inclusive competition framework.
In-Depth Analysis: Facets of the New Competition Law
1. Expanded Jurisdiction and Scope
The new legislation extends its jurisdiction to encompass virtually all economic activities within the UAE, as well as international actions that impact the UAE market. Notably, it broadens the definition of economic activity to include all aspects of goods and services, spanning various stages of production and distribution.
Table 1: Jurisdiction Expansion under New Law
| Aspect | Old Law | New Law |
|---|---|---|
| Sectorial Coverage | Limited | All-encompassing |
| International Impact | Minimal | Considerable |
| Definition of Economic Activity | Narrower Scope | Wider, Inclusive Definition |
2. Rigorous Stance on Anti-Competitive Conducts
The New Competition Law refines its approach to anti-competitive practices, removing exemptions for agreements with low market share thresholds and introducing an “effects prohibition” approach. This means that the law now scrutinizes agreements not only based on their intent but also on their potential impact, particularly in cases of horizontal cooperation.
Table 2: Anti-Competitive Conducts Modifications
| Conduct Type | Old Law | New Law |
|---|---|---|
| Market Share Threshold Agreements | Exempted | No Exemption |
| Dominance Test | Basic | Includes Collective Dominance |
3. Enhanced Merger Control
A notable change is in the approach to merger control. The new law adopts a dual threshold test, considering both the annual turnover and the market shares of entities involved. This shift allows for a more nuanced assessment of potential anti-competitive effects of mergers and acquisitions.
Table 3: Merger Control Adjustments
| Criterion | Old Law | New Law |
|---|---|---|
| Threshold Test | Market Shares | Annual Turnover & Market Shares |
| Minister’s Response to Filings | Non-response = Acceptance | Silence = Refusal |
4. Stricter Penalties
The New Competition Law escalates the financial penalties for violations, with fines reaching up to 10% of an entity’s annual turnover. Additionally, it introduces administrative penalties, including a specific fine for obstructing the Competition Committee’s investigations.
Table 4: Penalty Structure Comparison
| Penalty Type | Old Law | New Law |
|---|---|---|
| Financial for Anti-Competitive Practices | Lower | Up to 10% of Annual Turnover |
| Administrative Penalties | None | Introduced |
5. Government Entities and Exemptions
The law offers a nuanced approach to entities owned by Federal or Emirate-level governments, subjecting them to the law unless specifically exempted.
Table 5: Government Entities Treatment
| Entity Type | Old Law | New Law |
|---|---|---|
| Federal/Emirate-owned | Varied | Subject to Law Unless Exempted |
Implications and Future Outlook
The New Competition Law in the UAE represents a significant advancement in the country’s economic regulatory framework. Its comprehensive scope and stringent penalties indicate a commitment to fostering a competitive and fair market environment. However, the full impact of this legislation will become more apparent once the executive regulations are released, providing further clarity on its application.
Closing Thoughts
The enactment of the UAE’s New Competition Law is a forward-thinking move, aligning the nation more closely with international best practices in economic regulation. This law is expected to have far-reaching effects on the business landscape, promoting fairness and competition. As the Ministry of Economy gears up to enforce this new regime, entities operating in the UAE must adapt to comply with its extensive provisions.
