Practical Insights on UAE’s New Competition Law
The UAE has recently issued a new Competition Law Decree Law No. (36) of 2023 (the “New Competition Law”) which came into effect on 28 December 2023. The New Competition Law overturns the previous Competition Law Decree Law No. (4) of 2012 (the “Old Competition Law”). The main key differences can be summarized as follows:
The New Competition Law introduces key changes compared to the old regime. Previously, a filing requirement for merger control was triggered only if the combined market share of the entities exceeded 40%. Under the new law, filings are required if either the total sales of the relevant parties surpass an amount or their combined market share exceeds a percentage, both to be determined by the UAE Ministry of Economy within the next three months. The merger review timeline has also been extended, requiring filings at least 90 days prior to completion, with a lack of decision within this period (potentially extendable by another 45 days) resulting in rejection, contrasting with the old law’s 30-day requirement and implicit approval for non-decisions. Exemptions have been narrowed, now primarily applying to entities owned by the UAE federal government or Emirate states, unlike the broader sectoral exemptions and SME exemptions previously available. Additionally, new prohibitions have been introduced, including the exploitation of economic dependency and predatory pricing, and recognizing digital markets, expanding the focus beyond the old law's emphasis on anti-competitive practices and abuse of dominance.
Effect of the New Competition Law in the Corporate World
Under the Old Competition Law, the requirement for antitrust filings were only triggered for transactions where the combined market share of the parties exceeded 40%, a threshold considerably higher than those in many international markets. This high bar, coupled with wider exemptions for certain entities, resulted in very limited antitrust filings within the UAE. With the introduction of the New Competition Law, both the thresholds for triggering antitrust filings and the scope of entities exempt from such filings have been narrowed. This change will significantly increase the number of transactions that will be subject to antitrust clearance in the UAE.
Transitioning Thresholds
Given the current transition period, and that the Implementing Regulations for the New Competition Law are yet to be published, companies have found themselves in a scenario of regulatory uncertainty on weather to abide with the old thresholds or the new thresholds. As we are now in the interim period before the Implementing Regulations (that will set out the new thresholds) of the New Competition Law are officially published, the Old Competition Law thresholds will still be in force until the Implementing Regulations are published. The Implementing Regulations are expected to be published in the next three months.
The Competition Regulatory Committee (“CRC”) is responsible with overseeing fair competition within the market, overseeing antitrust filings, preventing monopoly, and ensuring compliance with all competition regulations set forth.
Given that each transaction is different, the complexity of filings will considerably vary. However, we have consistently found the CRC to be supportive and readily accessible throughout the whole process of filing.
From our previous experience with filing for antitrust clearance, we can summarize the process of obtaining approval as follows:
(1) The application is filed with the Ministry of Economy along with all necessary documents. The application will be registered on the relevant registry in the Ministry of Economy and the applicant(s) will then receive confirmation.
(2) Newspaper publication in two local newspapers – confidentiality duty to mark the same and provide non-confidential brief about the transaction.
(3) The relevant department will then review the application and may request additional information and/or documents it deems necessary for its review. Thereafter, the department will prepare and submit to the Minister of the Ministry of Economy a memorandum in relation to the approval of the application for the Minister’s review.
(4) The Ministry may, during its evaluation of the application, invite interest parties to express their opinions on the Economic Concentration transaction by publishing the material terms of the transaction on the Ministry’s website. Any interested party has the right to submit data or documents in relation to the transaction or file their objection to the transaction in question.
(5) The Minister shall issue a decision whereby (i) the transaction is approved, (ii) the transaction is approved subject to fulfilment of certain terms and conditions, (iii) the transaction is rejected, or (iv) the transaction is deemed exempt from Article 12 of the Competition Law.
Additionally, we have also formulated a standard questionnaire to guide our clients on understanding what documents and information will be required for submission during the filing process. The questionnaire can be outlined as follows:
1. What is the type of economic concentration and at what date will the economic concentration be instigated?
2. Please identify the relevant market within which the economic concentration will occur and the size of the relevant market (relevant services).
3. What is the size of the concerned market, and what sources helped you determine the size of the market?
4. What is the total sale value of the concerned goods or services?
5. What is your sale value percentage in comparison to the concerned market as a whole?
6. What goods or services does your establishment deal with?
7. What are the positive and negative effects of the concentration, and what measures are proposed to mitigate said negative impacts?
8. Who are the parties involved in the transaction that may lead to the economic concentration, and what formal agreement has been signed between both parties?
9. What is the legal form and nationality of each branch concerned to the economic transaction?
10. What is the overall impact of the proposed economic concentration on the market competition?
11. Please provide details on all economic concentrations the concerned parties have concluded in the past 5 years
12. Please provide all details relating to foreign ownership of the concerned parties, as well as the presence of the concerned parties to the international market.
13. Any additional information to facilitate the study of this application.
Filing with the CRC must be conducted in Arabic, accompanied with an Arabic translation of all submitted documents. Please note that parties that fail to notify the CRC but meet the filing requirements, will be fined an amount no less than 2% and no more than 10% of the total annual revenue or a fixed amount between AED 500,000 and AED 5,000,000.
For further information, please contact:
Salam Alsmadi: [email protected]
Karam Al Dali: [email protected]