The United Arab Emirates has significantly revamped its competition regime with the introduction of Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, effective December 29, 2023. This new law, replacing the 2012 Law, introduces a comprehensive merger control regime and expands the scope of antitrust regulations, signaling a major shift in the UAE’s approach to economic concentrations and competitive practices.
Overview of the New Competition Law
- Authority: The Competition Regulatory Committee within the UAE Ministry of Economy continues to oversee competition matters, as established under the New Competition Law.
- Implementing Regulations: Detailed operational guidelines are expected in the next six months, continuing the effectiveness of the 2012 Law’s regulations until superseded.
Key Features of the Merger Control Regime
- Definition of Economic Concentration: Includes actions leading to transfer of ownership or control in establishments, impacting market dynamics.
- Notification Thresholds: Parties involved in mergers or acquisitions must notify and obtain clearance if they meet certain turnover or market share thresholds, to be specified by the UAE Council of Ministers.
- Merger Review Timeline: Filings must be submitted 90 days prior to transaction completion, with the Minister of Economy required to issue a decision within 90 days, extendable by 45 days.
Execution and Enforcement
- Merger Control Decisions: The Minister of Economy, advised by the Competition Committee, will decide on transactions, with possible outcomes including unconditional approval, conditional approval, rejection, or declining jurisdiction.
- Fines for Non-Compliance: Failure to file can result in fines ranging from 2% to 10% of annual revenues from relevant products or services in the UAE, or fixed amounts between AED 500,000 and AED 5,000,000.
Additional Antitrust Provisions
- Expanded Geographic Scope: Includes digital marketplaces and recognizes competition in a “digital place.”
- Prohibitions: New law addresses conduct exploiting economic dependency, predatory pricing, and abuse of dominant market positions.
- Exemptions: Certain entities and sector-specific agreements are exempt, though exemptions for small and medium-sized enterprises have been removed.
Implications for Businesses
- Broader Filing Requirements: The introduction of turnover-based thresholds suggests more transactions may need to comply, pending details in the Implementing Regulations.
- Sector-Specific Analysis: Companies must assess other laws governing their sector to verify exemptions.
- Regional Trend: This overhaul is part of a wider trend in the Middle East and North Africa, where countries are increasingly focusing on antitrust enforcement and competition regulation.
Conclusion
The UAE’s new Competition Law represents a pivotal evolution in the region’s approach to competition regulation, particularly in merger control. Businesses operating in the UAE or involved in transactions impacting the UAE market must navigate these changes, ensure compliance, and prepare for a more proactive regulatory environment. This development emphasizes the importance of seeking expert counsel in antitrust matters and staying informed about regional competition law dynamics.
